March WTI crude oil (CLH25) on Friday closed down -0.55 (-0.77%), and March RBOB gasoline (RBH25) closed down -0.0208 (-0.99%).
Crude oil prices traded lower on Friday on continued concern about US reciprocal tariffs announced on Thursday, which would likely have a negative impact on global economic growth and energy demand. Also, there are hopes for progress in ending the Russia-Ukraine war, which could eventually lead to reduced sanctions on Russian oil. In addition, the IEA and US EIA this week forecasted a small oil surplus for this year.
However, oil prices on Friday saw support from a weaker dollar. Crude oil prices also saw support from expectations for tighter US sanctions on Iranian oil exports after US Treasury Secretary Bessent said the US aims to cut Iranian oil exports by more than 90%. The US Treasury last Thursday sanctioned an international network facilitating the shipment of Iranian crude oil to China.
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 had 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. Meanwhile, 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. 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 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.
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. OPEC+ last month 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 planned 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.
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 Friday that active US oil rigs in the week ending February 14 rose by +1 to 481 rigs, modestly 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.
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 Barchart
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