Oct WTI crude oil (CLV24) Wednesday closed up +1.56 (+2.37%), and Oct RBOB gasoline (RBV24) closed up +2.72 (+1.45%).
Crude oil and gasoline prices Wednesday settled sharply higher. Crude found support Wednesday from a smaller-than-expected build in weekly EIA crude inventories. Also, Hurricane Francine made landfall on Wednesday in Louisiana, with six major US refineries its path. Crude was undercut by Wednesday's rally in the dollar index to a 1-week high.
Crude prices on Tuesday earlier tumbled to a 16-month nearest-futures low, and gasoline dropped to a 3-1/2 year low due to concern about global energy demand. Also, Morgan Stanley Tuesday cut its Brent crude price forecast for the second time in two weeks as it now projects Brent crude will average $75 a barrel in the fourth quarter, down from a previous projection of $80 a barrel.
A decline in crude oil held worldwide on tankers is bullish for prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -2.14% w/w to 60.25 million bbl in the week ended September 6.
Crude prices found support last Thursday after OPEC+ agreed to pause its scheduled crude production hike of 180,000 bpd in October and November due to recent weakness in crude prices and signs of fragile global energy demand.
Crude oil prices have had some negative carryover since last Tuesday when Libyan central bank governor Sadiq Al-Kibir said there are "strong" indications that political factions are nearing an agreement to overcome political differences and resume the country's crude oil production. Last week, Libya's eastern government declared force majeure on all oil fields, terminals, and crude export facilities as it called for a halt to all crude production and exports due to political conflict over who controls the country's central bank and oil revenues. The halt to Libya's crude exports threatened to remove more than 1 million bpd of crude from the global market.
A supportive factor for crude is a decline in Russian crude exports. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -25,000 bpd to 3.1 million bpd in the week to September 1. Meanwhile, increased Russian crude production is negative for oil prices after Russia's Energy Ministry reported on August 23 that Russia's July crude production was 9.045 million bpd, about 67,000 bpd above the output target it agreed to with OPEC+.
Wednesday's weekly EIA report was mixed for crude and products. On the bullish side, EIA crude inventories rose +833,000 bbl, below expectations of a +1.05 million bbl build. Also, crude supplies at Cushing, the delivery point of WTI futures, fell -1.7 million bl to a 10-month low. On the bearish side, EIA gasoline stockpiles rose +2.31 million bbl versus expectations of no change. Also, EIA distillate inventories rose +2.31 million bbl, more than expectations of +275,000 bl.
Wednesday's EIA report showed that (1) US crude oil inventories as of September 6 were -4.3% below the seasonal 5-year average, (2) gasoline inventories were -0.6% below the seasonal 5-year average, and (3) distillate inventories were -8.6% below the 5-year seasonal average. US crude oil production in the week ending September 6 was unchanged w/w at 13.3 million bpd, just below the record high of 13.4 million bpd from the week of August 16.
Baker Hughes reported last Friday that active US oil rigs in the week ending September 6 were unchanged at 483 rigs, modestly above the 2-1/2 year low of 477 rigs posted in the week ending July 19. The number of US oil rigs has fallen over the past year from the 4-year high of 627 rigs posted in December 2022.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
