March WTI crude oil (CLH25) Thursday closed down -0.82 (-1.09%), and March RBOB gasoline (RBH25) closed up +0.0084 (+0.40%).
Crude and gasoline prices settled mixed on Thursday, with crude falling to a 1-1/2 week low. Crude gave up early gains Thursday and turned lower after President Trump said he would push Saudi Arabia and OPEC to reduce the price of crude. Crude prices Thursday initially moved higher due to a weaker dollar and signs of tighter global supplies as US sanctions on Russian crude have tightened global oil markets. Thursday's weekly EIA report was mixed for crude prices and products as crude inventories fell to a 2-3/4 year low, but gasoline supplies climbed to an 11-month high.
An increase in crude oil held worldwide on tankers is bearish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days rose by +2.5% w/w to 54.23 million bbl in the week ended January 17.
Crude prices have carryover support from 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. In addition, President Trump on Wednesday warned that he would impose additional sanctions on Russia if Russian President Putin doesn't negotiate on Ukraine.
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 pick for national security adviser, Mike Walz, vowed a return to "maximum pressure" on Iran. Last Thursday, incoming 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 Dec crude production fell -120,000 bpd to 27.05 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.
Thursday's weekly EIA report was mixed for crude and products. On the bearish side, EIA gasoline supplies rose +2.30 million bbl to an 11-month high, a larger build than expectations of +2.19 million bbl. On the bullish side, EIA crude inventories fell -1.02 million bbl to a 2-3/4 year low, a larger draw than expectations of -400,000 bbl. Also, EIA distillate stockpiles unexpectedly fell -3.07 million bbl versus expectations of a +790,000 bbl build. In addition, crude supplies at Cushing, the delivery point of WTI futures, fell -148,000 bbl.
Thursday's EIA report showed that (1) US crude oil inventories as of January 17 were -6.4% below the seasonal 5-year average, (2) gasoline inventories were -0.7% below the seasonal 5-year average, and (3) distillate inventories were -5.7% below the 5-year seasonal average. US crude oil production in the week ending January 17 was unchanged w/w to 13.477 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 17 fell -2 to 478 rigs, just above the 2-3/4 year low of 477 rigs posted November 29. 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.
