March WTI crude oil (CLH25) today is down -0.07 (-0.10%), and March RBOB gasoline (RBH25) is up +0.0424 (+2.06%).
Crude oil and gasoline prices today are mixed, with gasoline posting a 2-week high. Crude today initially moved higher after President Trump on Saturday placed tariffs on imports from Canada and Mexico, the US's largest crude suppliers. Also, stronger-than-expected US economic reports were supportive of energy demand and crude prices. However, crude prices gave up their advance and turned lower after the dollar index (DX00) rallied to a 3-week high, and after President Trump said he would delay tariffs on Mexico for a month.
Today's US economic news was better-than-expected and bullish for energy demand and crude prices. The Jan ISM manufacturing index rose +1.7 to 50.9, stronger than expectations of 50.0 and the highest level in 2-1/3 years. Also, Dec construction spending rose +0.5% m/m, stronger than expectations of +0.2% m/m.
Strength in the crude crack spread is supportive for crude prices as the crack spread today climbed to a 5-1/4 month high. The stronger crack spread encourages refiners to boost their crude purchases and refine the crude into gasoline and distillates.
A decline in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported today that crude oil stored on tankers that have been stationary for at least seven days fell by -6.9% w/w to 67.30 million bbl in the week ended January 31.
OPEC+ said today at its monthly meeting that it would not change its oil-production plans in the first quarter and then gradually restore crude output in monthly stages beginning in April.
Crude prices saw support on January 10 when the US imposed new sanctions on Russia's oil industry that could curb global oil supplies. The measures targeted Gazprom Neft and Surgutneftgas, which exported about 970,000 bpd of Russian crude in the first 10 months of 2024, accounting for about 30% of its tanker flow, according to Bloomberg data. The US also targeted insurers and traders linked to hundreds of tanker cargoes.
A decline in Russian crude oil exports is supportive of crude oil prices. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -260,000 bpd to 2.75 million bpd in the week to January 19.
The outlook for new sanctions on Iranian and Russian crude exports could limit global oil supplies and is bullish for prices. President Trump's national security adviser, Mike Walz, vowed a return to "maximum pressure" on Iran. Also, US Treasury Secretary Bessent said he would be "100% on board for taking sanctions up," especially on Russian oil majors.
Crude found support last month after OPEC+ pushed back a planned hike of its crude production by +180,000 bpd from January to April and said it would unwind its crude output cuts at a slower pace than planned. Also, the United Arab Emirates (UAE) said it will delay the planned 300,000 bpd increase in its crude production target from January to April. OPEC+ had previously agreed to restore 2.2 million bpd of output in monthly installments between January and late 2025. However, that is now pushed back until September 2026. OPEC Jan crude production fell -700,000 bpd to 27.03 million bpd.
Crude oil demand in China has weakened and is a bearish factor for oil prices. According to Chinese customs data, China's 2024 crude imports fell -1.9% y/y to 553 MMT. China is the world's biggest crude importer.
Last Wednesday's EIA report showed that (1) US crude oil inventories as of January 24 were -5.6% below the seasonal 5-year average, (2) gasoline inventories were -0.3% below the seasonal 5-year average, and (3) distillate inventories were -8.7% below the 5-year seasonal average. US crude oil production in the week ending January 24 fell -1.8% w/w to 13.24 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6.
Baker Hughes reported last Friday that active US oil rigs in the week ending January 31 rose by +7 to 479 rigs, rebounding from the prior week's 3-year low of 472 rigs. The number of US oil rigs has fallen over the past two years from the 4-1/2 year high of 627 rigs posted in December 2022.
