Sep WTI crude oil (CLU24) today is down -1.52 (-1.94%), and Sep RBOB gasoline (RBU24) is down -0.0410 (-1.69%).
Crude oil prices on Tuesday continued lower on weaker-than-expected US economic reports and US political uncertainty, which increased after President Biden on Sunday dropped out of the presidential race and endorsed Vice President Harris.
Today’s June US existing home sales report of -5.4% to 3.89 million was weaker than market expectations for a -3.2% drop to 3.98 million. Also, the July Richmond Fed manufacturing index fell by -7 points to -17, weaker than expectations for a +3 point rise to -7.
Gasoline prices have underlying support as Exxon's Chicago-area refinery is still closed after a tornado last week cut electricity and forced a shutdown of the refinery on July 15. The refinery has capacity of 252,000 barrels/day.
Crude has support from wildfires in Canada that threaten to curb Canadian crude production. Rystad Energy said last Friday that 52 out-of-control wildfires in Alberta, Canada, threaten nearly 500,000 bpd of crude oil sands output and pipeline shipments to the US.
OPEC+ rolled out a plan to restore some crude production in Q4, which sparked worries about a glut in global oil supplies. On June 2, OPEC+ extended the 2 million bpd of voluntary crude production cuts into Q3 but said they would gradually phase out the cuts over the following 12 months, beginning in October. OPEC pledged to extend its crude production cap at about 39 million bpd to the end of 2025. Also, the UAE was given a 300,000 bpd boost to its production target for 2025. In June, OPEC crude production fell -80,000 bpd to 26.98 million bpd.
Crude oil prices have underlying support from the Hamas-Israel conflict. Israel's military continues to conduct operations in Gaza, and there is the continued risk that the war might spread to Hezbollah in Lebanon or even to a direct conflict with Iran. Meanwhile, ongoing attacks on commercial shipping in the Red Sea by Iran-backed Houthi rebels have forced shippers to divert shipments around the southern tip of Africa instead of going through the Red Sea, disrupting global crude oil supplies.
Last Wednesday's EIA report showed that (1) US crude oil inventories as of July 12 were -4.7% below the seasonal 5-year average, (2) gasoline inventories were +0.03% above the seasonal 5-year average, and (3) distillate inventories were -6.7% below the 5-year seasonal average. US crude oil production in the week ending July 12 was unchanged w/w and matched a record high of 13.3 million bpd.
Baker Hughes reported last Friday that active US oil rigs in the week ending July 19 fell -1 rig to a 2-1/2 year low of 477 rigs. The number of US oil rigs has fallen over the past year from the 4-year high of 627 rigs posted in December 2022.
More Crude Oil News from Barchart
- Crude Oil Continues Lower on Economic Uncertainty
- Crude Oil Continues Lower on Economic Uncertainty
- Crude Ends Sharply Lower on a Strong Dollar and Weak Stocks
- Crude Pressured by Dollar Strength and Energy Demand Concerns
