February WTI crude oil (CLG25) Thursday closed down -0.48 (-0.68%), and February RBOB gasoline (RBG25) closed down -0.0119 (-0.60%).
Crude oil and gasoline prices Thursday gave up an early advance and closed moderately lower. Crude prices retreated after Thursday's report on weekly US jobless claims showed US continuing unemployment claims rose to a 3-year high, heightening concerns about US labor market strength.
Crude on Thursday initially moved higher due to a weaker dollar, and after Tuesday's API report showed weekly US crude stockpiles fell -3.2 million bbl last week. Due to this week's Christmas holiday, the weekly EIA crude inventory report will be released on Friday. Crude also has carryover support from Tuesday on reports that China may sell a record 3 trillion yuan ($411 billion) of special Treasury bonds in 2025 to bolster economic stimulus for its economy.
Oil prices continue to be underpinned by global political uncertainty after President-Elect Trump over the weekend threatened to take over the Panama Canal if transit rates are not cut, adding to his various threats for tariffs and increased sanctions.
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 rise in crude oil held worldwide on tankers is bearish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days rose by +7% w/w to 70.20 million bbl in the week ended December 20.
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.
Escalation of the Ukraine-Russian war is supportive of crude prices. Russia launched a new hypersonic missile into the city of Dnipro late last month, following Ukraine's expanded use of Western-provided long-range missiles against targets inside Russia. Also, Russian President Putin warned that Russia could strike “decision-making centers” in Kyiv with ballistic missiles. Putin also approved an updated nuclear doctrine that expands the conditions for Russia to use nuclear weapons, including in response to a conventional attack on its soil.
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.
The consensus is that Friday's weekly EIA crude inventories will fall by -600,000 bbl, and gasoline supplies will decline by -500,000 bbl.
Wednesday's EIA report showed that (1) US crude oil inventories as of December 13 were -5.9% below the seasonal 5-year average, (2) gasoline inventories were -3.3% below the seasonal 5-year average, and (3) distillate inventories were -7.0% below the 5-year seasonal average. US crude oil production in the week ending December 13 fell -0.2% w/w to 13.604 million bpd, falling slightly from the previous week's record of 13.631 million bpd.
Baker Hughes reported last Friday that active US oil rigs in the week ending December 20 were up +1 rig to 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.
