February WTI crude oil (CLG25) Tuesday closed up +0.69 (+0.94%), and February RBOB gasoline (RBG25) closed down -0.0089 (-0.44%).
Crude oil and gasoline prices settled mixed on Tuesday. Crude found support Tuesday from stronger-than-expected US economic news that shows economic strength and supports energy demand. Also, falling Russian crude exports keep global supplies tight and are bullish for oil prices. A stronger dollar Tuesday limited gains in crude.
Tuesday's US economic news was better-than-expected and bullish for energy demand and crude prices. Nov JOLTS job openings unexpectedly rose +259,000 to a 6-month high of 8.098 million, stronger than expectations of a decline to 7.740 million. Also, the Dec ISM services index rose +2.0 to 54.1, stronger than expectations of 53.5.
A decline in Russian crude exports is supportive of crude. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -190,000 bpd to 2.88 million bpd in the week to January 5.
Weakness in the crude crack spread is bearish for crude prices. Tuesday's crack spread fell to a 2-week low, discouraging refiners from purchasing crude oil and refining it into gasoline and distillates.
Crude prices found support Monday after a Washington Post report said President-elect Trump's aides are weighing a tariff program that would cover only critical imports. If implemented, such a plan would disrupt global trade less than expected, supporting global economic growth and energy demand.
Crude also garnered support Monday after Saudi Arabia raised its crude prices for Asian customers for delivery in February by 60 cents per bbl, above expectations of 10 cents per bbl, and a sign Saudi Arabia sees tighter supplies in its largest crude export market.
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 -33% w/w to 48.02 million bbl in the week ended January 3.
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.
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 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.
The consensus is that Wednesday's weekly EIA crude inventories will fall by -2.0 million bbl, and gasoline supplies will increase by +500,000 bbl.
Last Thursday's EIA report showed that (1) US crude oil inventories as of December 27 were -5.3% below the seasonal 5-year average, (2) gasoline inventories were -0.4% below the seasonal 5-year average, and (3) distillate inventories were -5.9% below the 5-year seasonal average. US crude oil production in the week ending December 27 fell -0.1% w/w to 13.573 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 3 fell -1 to 482 rigs, modestly 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.
