April WTI crude oil (CLJ25) today is up +1.50 (+2.26%), and April RBOB gasoline (RBJ25) is up +0.0438 (+2.08%).
Crude oil and gasoline prices are moving higher. Today's weekly EIA inventory report supported crude prices after crude supplies rose less than expected and gasoline stockpiles fell more than expected. Also, geopolitical risks are boosting crude prices after Houthi rebels said they would resume attacks on Israeli ships unless Israel ends its ban on allowing aid into Gaza. Limiting gains in crude is an escalation of trade tensions that threaten to turn into a global trade war that undercuts economic growth and energy demand after US tariffs on steel and aluminum went into effect today, and the EU and Canada retaliated by imposing tariffs on some US goods.
Crude prices have support from last Thursday when US Energy Secretary Wright said that he plans to seek up to $20 billion to refill the Strategic Petroleum Reserve, which currently stands at 395 million bbl but can hold a maximum of 700 million bbl.
Crude has carryover support from last Thursday when Treasury Secretary Bessent said the US is willing to "shut down" Iran's oil sector to achieve peace in the Middle East.
Ramped-up Russian oil exports are negative for crude prices after data compiled by Bloomberg from analytics firm Vortexa showed Russian Feb oil products exports reached a 1-year high of 2.5 million bpd.
Crude prices were undercut when OPEC+ said last Monday it would restart some halted crude output in April, adding 138,000 bpd to global supplies. That is the first of a series of monthly hikes to reverse the 2-year-long production cut, which will gradually restore a total of 2.2 million bpd. OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won't be fully restored until September 2026. OPEC Feb crude production rose +320,000 bpd to a 14-month high of 27.35 million bpd.
In a supportive factor for crude oil prices, the US on January 10 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 -45,000 bpd to 3.48 million bpd in the week to March 9.
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.
An increase 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 +4.9% w/w to 84.15 million bbl in the week ended March 7.
Today's weekly EIA inventory report was supportive of crude oil and products. EIA crude inventories rose +1.45 million bbl, less than expectations of +2.0 million bbl. Also, EIA gasoline supplies fell -5.7 million bbl, a larger draw than expectations of -1.6 million bbl. In addition, crude supplies at Cushing, the delivery point of WTI futures, fell -1.2 million bbl.
Today's EIA report showed that (1) US crude oil inventories as of March 7 were -5.1% below the seasonal 5-year average, (2) gasoline inventories were +1.3% above the seasonal 5-year average, and (3) distillate inventories were -4.8% below the 5-year seasonal average. US crude oil production in the week ending March 7 rose +0.5% w/w to 13.575 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 March 7 were unchanged at 486 rigs, moderately above the 3-year low of 472 rigs posted on 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.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
