March WTI crude oil (CLH25) Thursday closed down -0.08 (-0.11%), and March RBOB gasoline (RBH25) closed up +0.0211 (+1.01%).
Crude oil and gasoline prices settled mixed on Thursday, with crude falling to a 6-week low. Crude prices are under pressure as geopolitical risks eased after President Trump and Russian President Putin agreed to talks on ending the war in Ukraine, potentially easing the risk to global crude supplies.
However, crude prices recovered from their worst levels after the dollar index (DXY00) fell to a 2-week low and after Commerce Secretary nominee Lutnick said that President Trump's reciprocal tariffs will not go into effect until after April 1, giving time for negotiations before the tariffs are imposed.
Crude prices are under pressure after President Trump said he spoke with Russian President Putin on Wednesday and that they agreed to begin talks on ending the war in Ukraine. Also, Ukraine President Zelenskiy said he is ready to swap land in negotiations with Russia. An end to the Ukraine war would be bearish for crude as it could lead to the end of sanctions on Russian crude that would boost global oil supplies.
Oil prices saw support this week after Saudi Arabia, Iraq, and the United Arab Emirates raised their crude selling prices to Asian customers for March delivery.
Crude has support 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 gained support after the US ramped up sanctions on Iranian crude exports last Thursday when the US Treasury sanctioned an international network facilitating 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. Russian oil production fell to 8.062 million bpd in January, which was -16,000 bpd below its OPEC+ quota.
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.
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 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.
