February WTI crude oil (CLG25) today is up +0.65 (+0.89%), and February RBOB gasoline (RBG25) is up +0.0057 (+0.28%).
Crude oil and gasoline prices today are moderately higher, with crude oil posting a fresh 2-1/2 month high. Today's weaker dollar is supportive of energy prices. Signs of US economic strength also support crude prices after the Dec ISM manufacturing index rose more than expected. Today's stock rally shows confidence in the economic outlook and is positive for energy demand and crude prices.
Today's US economic news was better than expected and supported crude prices. The US Dec ISM manufacturing index unexpectedly rose +0.9 to a 9-month high of 49.3, stronger than expectations of a decline to 48.2.
Signs of strong US jet fuel demand support crude prices after the EIA reported US Oct jet fuel demand rose +1.9% y/y to 1.73 million bpd, the highest monthly level in 7 years.
The outlook for new sanctions on Iranian and Russian crude exports could limit global oil supplies and is bullish for prices. Mike Walz, President-elect Trump's pick for national security adviser, vowed a return to "maximum pressure" on Iran, and the Biden administration said it is considering new, harsher sanctions on Russian crude oil.
A drop 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 -16% w/w to 60.27 million bbl in the week ended December 27.
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 Nov crude production rose +120,000 bpd to 27.02 million bpd.
Crude oil demand in China has weakened and is a bearish factor for oil prices. According to data compiled by Bloomberg, China's Nov apparent oil demand fell -2.14% y/y to 14.013 million bpd, and Jan-Nov apparent oil demand was down -3.26% y/y to 13.996 million bpd. China is the world's second-largest crude consumer.
A decline in Russian crude exports is supportive of crude. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -170,000 bpd to 2.97 million bpd in the week to December 15.
Thursday's EIA report showed that (1) US crude oil inventories as of December 27 were -5.3% below the seasonal 5-year average, (2) gasoline inventories were -0.4% below the seasonal 5-year average, and (3) distillate inventories were -5.9% below the 5-year seasonal average. US crude oil production in the week ending December 27 fell -0.1% w/w to 13.573 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 December 27 were unchanged at 483 rigs, modestly above the 2-3/4 year low of 477 rigs posted last month. 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.
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. More news from BarchartThe views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
