March WTI crude oil (CLH25) today is up +0.88 (+1.24%), and March RBOB gasoline (RBH25) is up +0.0044 (+0.21%).
Crude oil prices are trading higher after a drone attack on a Russian pumping station may reduce crude oil exports from Kazakhstan. Oil prices are also seeing support from a Bloomberg report that OPEC+ is considering a delay of monthly supply increases that are currently due to start in April.
On the bearish side, oil prices are being undercut by the possibility of peace talks on the Russia-Ukraine war that could eventually lead to reduced sanctions on Russia and the full resumption of Russian oil exports. Oil prices are also being undercut by today's mild rally in the dollar index.
Crude oil prices have support from expectations for tighter US sanctions on Iranian oil exports after US Treasury Secretary Bessent last week said the US aims to cut Iranian oil exports by more than 90%. The US Treasury, in early February, sanctioned an international network facilitating the shipment of Iranian crude oil to China.
Crude found support last Monday when Politico reported that 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. Meanwhile, 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 -130,000 bpd to 3.09 million bpd in the week to February 2. Russian oil production fell to 8.062 million bpd in January, which was -16,000 bpd below its OPEC+ quota.
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.
A weekly 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 +1.4% w/w to 73.77 million bbl in the week ended February 14.
OPEC+ said at its monthly meeting on February 3 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. OPEC+ last month 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 planned 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.
Last Wednesday's EIA report showed that (1) US crude oil inventories as of February 7 were -4.2% below the seasonal 5-year average, (2) gasoline inventories were -1.2% below the seasonal 5-year average, and (3) distillate inventories were -11.2% below the 5-year seasonal average. US crude oil production in the week ending February 7 rose +0.1% w/w to 13.494 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 14 rose by +1 to 481 rigs, modestly 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.
