March WTI crude oil (CLH25) Monday closed up +1.32 (+1.86%), and March RBOB gasoline (RBH25) closed down -0.0008 (-0.04%).
Crude oil and gasoline prices settled mixed Monday. Crude oil prices rallied as tighter US sanctions on Russian crude limited global oil supplies, allowing the largest Middle Eastern oil producers to raise prices. Also, concerns that global crude supplies could tighten even further are bullish for crude after the US ramped up sanctions on Iranian crude exports last Thursday. A stronger dollar Monday weighed on oil and gasoline prices.
Oil prices saw support Monday after Saudi Arabia, Iraq, and the United Arab Emirates raised their crude selling prices to Asian customers for March delivery.
Crude also climbed on Monday's report from Politico that said EU countries may begin seizures of Russia's illegal shadow fleet of oil-exporting tankers in the Baltic Sea using international law to grab vessels on environmental and piracy grounds.
Crude has gained support after the US ramped up sanctions on Iranian crude exports last Thursday when the US Treasury sanctioned an international network that facilitated the shipment of Iranian crude oil to China.
A decline 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 -14% w/w to 65.79 million bbl in the week ended February 7.
OPEC+ said last Monday 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. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -130,000 bpd to 3.09 million bpd in the week to February 2.
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 31 were -3.8% below the seasonal 5-year average, (2) gasoline inventories were +0.3% above the seasonal 5-year average, and (3) distillate inventories were -12.4% below the 5-year seasonal average. US crude oil production in the week ending January 31 rose +1.8% w/w to 13.478 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 February 7 rose by +1 to 480 rigs, modesty above the 3-year low of 472 rigs posted January 24. 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.
