Oct WTI crude oil (CLV24) today is down -2.52 (-3.67%), and Oct RBOB gasoline (RBV24) is down -4.96 (-2.58%).
Crude oil and gasoline prices today are sharply lower, with crude falling to a 16-month nearest-futures low and gasoline dropping to a 3-1/2 year low. A stronger dollar today is bearish for energy prices. Crude oil prices also fell on concern about global energy demand after news that Chinese imports rose less than expected.
Crude prices also came under pressure today after Morgan Stanley cut its Brent crude price forecast for the second time in two weeks. Morgan Stanley projects Brent crude will average $75 a barrel in the fourth quarter, down from a previous projection of $80 a barrel.
Chinese trade news today was mixed for energy demand and crude prices. On the negative side, China Aug imports rose +0.5% y/y, weaker than expectations of +2.5% y/y. Conversely, China's Aug exports rose +8.7% y/y, stronger than expectations of +6.6% y/y and the largest increase in 17 months.
Crude oil prices have some support as Tropical Storm Francine is expected to strengthen into a hurricane in the Gulf of Mexico later this week, which could disrupt US crude production and refining on the Gulf Coast, where 20% of US crude production is produced and 48% of US petroleum refining capacity is located.
A decline in crude oil held worldwide on tankers is bullish for prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -2.14% w/w to 60.25 million bbl in the week ended September 6.
Crude prices found support last Thursday after OPEC+ agreed to pause its scheduled crude production hike of 180,000 bpd in October and November due to recent weakness in crude prices and signs of fragile global energy demand.
Crude oil prices have had some negative carryover since last Tuesday when Libyan central bank governor Sadiq Al-Kibir said there are "strong" indications that political factions are nearing an agreement to overcome political differences and resume the country's crude oil production. Last week, Libya's eastern government declared force majeure on all oil fields, terminals, and crude export facilities as it called for a halt to all crude production and exports due to political conflict over who controls the country's central bank and oil revenues. The halt to Libya's crude exports threatened to remove more than 1 million bpd of crude from the global market.
A supportive factor for crude is a decline in Russian crude exports. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -25,000 bpd to 3.1 million bpd in the week to September 1. Meanwhile, increased Russian crude production is negative for oil prices after Russia's Energy Ministry reported on August 23 that Russia's July crude production was 9.045 million bpd, about 67,000 bpd above the output target it agreed to with OPEC+.
Last Thursday's EIA report showed that (1) US crude oil inventories as of August 30 were -4.5% below the seasonal 5-year average, (2) gasoline inventories were -2.2% below the seasonal 5-year average, and (3) distillate inventories were -9.5% below the 5-year seasonal average. US crude oil production in the week ending August 30 was unchanged w/w at 13.3 million bpd, falling back from the record high of 13.4 million bpd from the week of August 16.
Baker Hughes reported last Friday that active US oil rigs in the week ending September 6 were unchanged at 483 rigs, modestly above the 2-1/2 year low of 477 rigs posted in the week ending July 19. The number of US oil rigs has fallen over the past year from the 4-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.
