December WTI crude oil (CLZ24) Thursday closed up +0.65 (+0.95%), and December RBOB gasoline (RBZ24) closed up +0.0148 (+0.76%).
Crude oil and gasoline prices Thursday settled moderately higher. Crude is supported by positive carryover from Wednesday after weekly EIA crude and gasoline inventories unexpectedly declined. Crude is also climbing on signs of strength in the global economy that supports energy demand and prices.
Thursday's global economic news was supportive of energy demand and crude prices. US Sep personal spending rose +0.5% m/m, stronger than expectations of +0.4% m/m. Also, China's Oct manufacturing PMI rose +0.3 to 50.1, stronger than expectations of 49.9. In addition, the Eurozone Sep unemployment rate was unchanged at a record low of 6.3%, showing a stronger labor market than expectations of an increase to 6.4%. Finally, Japan's Sep industrial production rose +1.4% m/m, stronger than expectations of +0.8% m/m.
Wednesday's report from Reuters was bullish for crude as the report said OPEC+ could delay a planned +180,000 bpd hike in oil production scheduled to take effect in December by a month or more, citing concerns about soft global oil demand and rising supply.
Crude tumbled to a 3-week low Tuesday after Israel's weekend retaliatory strike was relatively limited and raised hopes that the direct attacks between Iran and Israel are over for the time being. Iran on Monday said its oil industry was operating normally in the wake of the weekend strike by Israel, which did not target Iranian oil infrastructure. Also, the risk premium in oil prices was reduced after Israel on Monday said it was open to a short truce in Gaza in return for the release of a small number of hostages.
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 -18% w/w to 55.49 million bbl in the week ended October 25.
Crude demand in China has weakened and is a bearish factor for oil prices. According to data compiled by Bloomberg, China's total apparent oil demand in Sep fell -6.98% y/y to 14.176 million bpd, and total Chinese oil demand this year (Jan-Sep) is down -3.8% y/y to 13.99 million bpd.
A bearish factor for crude oil is ramped-up crude output in Libya after the resolution of a political standoff that had curbed the country's crude production and exports. On October 13, Libya's National Oil Corp said that Libya's crude production rose to 1.3 million bpd, the most in two months, which boosted global crude supplies.
Crude prices found support after OPEC+ on September 5 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. However, the Financial Times reported on September 26 that Saudi Arabia is ready to abandon its unofficial oil price target of $100 a barrel to regain its market share and is committed to returning its crude production as planned on December 1. OPEC crude production in September fell -480,000 bpd to an 8-month low of 26.51 million bpd
An increase in Russian crude exports is bearish for crude. Weekly vessel-tracking data from Bloomberg showed Russian crude exports rose by +120,000 bpd to 3.54 million bpd in the week to October 27. However, Russia's Energy Ministry reported last Wednesday that Russia's Sep crude production was 8.97 million bpd, down -13,000 bpd from Aug and just below the 8.98 million bpd output target it agreed to with OPEC+.
Wednesday's EIA report showed that (1) US crude oil inventories as of October 25 were -4.2% below the seasonal 5-year average, (2) gasoline inventories were -3.5% below the seasonal 5-year average, and (3) distillate inventories were -8.8% below the 5-year seasonal average. US crude oil production in the week ending October 25 was unchanged w/w at a record 13.5 million bpd.
Baker Hughes reported last Friday that active US oil rigs in the week ending October 25 fell by -2 rigs to 480 rigs, just 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.
