April WTI crude oil (CLJ25) today is down -0.42 (-0.63%), and April RBOB gasoline (RBJ25) is down -0.0391 (-1.83%).
Crude oil and gasoline prices today are moderately lower, but crude oil remains above Wednesday's 1-3/4 year low. Crude oil prices are under pressure as US tariff uncertainty weighs on the outlook for energy demand. Also, ramped-up Russian oil exports boost global supplies and are negative for prices. In addition, crude prices have some negative carryover from Wednesday when weekly EIA crude inventories rose more than expected to a 7-month high.
Losses in crude oil are limited by today's fall in the dollar index (DXY00) to a 4-month low. Also, crude prices bounced from their lows after US Commerce Secretary Lutnick said President Trump is likely to defer tariffs on Canada and Mexico for all goods and services compliant with the United States-Mexico-Canada Agreement (USMCA).
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.
On Tuesday, the Trump administration imposed 25% tariffs on US imports from Canada and Mexico and doubled tariffs on imports from China to 20% from 10%. The US imposed a lower 10% tariff on US imports of energy resources from Canada, including crude oil. Canada responded with a package of counter-tariffs against US-made products effective immediately that includes 25% tariffs on about C$30 billion ($20.6 billion) worth of goods from US exporters, with a second round of tariffs on C$125 billion of products in three weeks, including big-ticket items like cars, steel, and aluminum. Canada is the largest single buyer of US goods, and vice versa. China also announced tariffs as high as 15% on US agricultural goods today, effective March 10, and banned trade with some defense companies in retaliation for US tariffs.
Gasoline prices have some underlying support after the US on Tuesday placed a 10% tariff on Canadian energy products, which will increase oil costs for US refiners, who depend heavily on imported grades of heavy crude from Canada, especially in the Midwest, to make gasoline and distillates.
Crude prices were undercut when OPEC+ said 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.
Oil prices continue to be undercut by the thaw in US-Russian relations and possible peace talks on the Russia-Ukraine war, which could eventually lead to reduced sanctions on Russia and the full resumption of Russian oil exports.
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. However, Russian crude exports have recently risen as weekly vessel-tracking data from Bloomberg showed Russian crude exports rose by +580,000 bpd to 3.53 million bpd in the week to March 2.
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 +6.9% w/w to 73.93 million bbl in the week ended February 28.
Wednesday's EIA report showed that (1) US crude oil inventories as of February 28 were -4.3% below the seasonal 5-year average, (2) gasoline inventories were +1.3% above the seasonal 5-year average, and (3) distillate inventories were -5.5% below the 5-year seasonal average. US crude oil production in the week ending February 28 was unchanged w/w at 13.508 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 28 fell by -2 to 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.
