February WTI crude oil (CLG25) today is up +0.78 (+1.10%), and February RBOB gasoline (RBG25) is up +0.0107 (+0.54%).
Crude oil and gasoline prices today are pushing higher, with crude posting an 8-week high. Crude has carryover support from last Friday when the weekly EIA report showed that US crude inventories fell by -4.24 million bbl, a larger draw than expectations of -600,000 bbl. Crude oil prices also have support from Middle East tensions after the US military bombed Houthi targets in Yemen, adding to recent Israeli strikes. Gains in crude are limited after the dollar index today climbed to a 1-week high.
Chinese economic news was mixed for crude prices. On the positive side, the China Dec non-manufacturing PMI rose +2.2 to 52.2, stronger than expectations of 50.2 and the fastest pace of expansion in 9 months. Conversely, the China Dec manufacturing PMI fell -0.2 to 50.1, weaker than expectations of 50.2.
The outlook for new sanctions on Iranian and Russian crude exports could limit global oil supplies and is bullish for prices. Mike Walz, President-elect Trump's pick for national security adviser, vowed a return to "maximum pressure" on Iran, and the Biden administration said it is considering new, harsher sanctions on Russian crude oil.
A drop in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -16% w/w to 60.27 million bbl in the week ended December 27.
Crude found support earlier this 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 Nov crude production rose +120,000 bpd to 27.02 million bpd.
Crude oil demand in China has weakened and is a bearish factor for oil prices. According to data compiled by Bloomberg, China's Nov apparent oil demand fell -2.14% y/y to 14.013 million bpd, and Jan-Nov apparent oil demand was down -3.26% y/y to 13.996 million bpd. China is the world's second-largest crude consumer.
A decline in Russian crude exports is supportive of crude. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -170,000 bpd to 2.97 million bpd in the week to December 15.
Last Friday's EIA report showed that (1) US crude oil inventories as of December 20 were -6.1% below the seasonal 5-year average, (2) gasoline inventories were -2.8% below the seasonal 5-year average, and (3) distillate inventories were -8.2% below the 5-year seasonal average. US crude oil production in the week ending December 20 fell -0.1% w/w to 13.585 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 December 27 were unchanged at 483 rigs, modestly above the 2-3/4 year low of 477 rigs posted last month. 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.
