April WTI crude oil (CLJ25) Friday closed down -2.08 (-2.87%), and April RBOB gasoline (RBJ25) closed down -0.0560 (-2.41%).
Crude oil and gasoline prices tumbled Friday, with gasoline posting a 3-week low. Friday's stronger dollar weighed on energy prices. Also, Friday's US economic news was mostly weaker than expected and bearish regarding energy demand. 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. Losses in crude accelerated Friday after prices fell below the 100-day moving average, triggering technical selling.
Friday's US economic news was primarily weaker-than-expected and bearish for crude prices. On the negative side, the University of Michigan US Feb consumer sentiment index was revised lower by -3.1 to a 15-month low of 64.7, weaker than expectations of no change at 67.8. Also, the Feb S&P Global services PMI unexpectedly fell -3.2 to 49.7, weaker than expectations of an increase to 53.0 and the steepest pace of contraction in 2 years. In addition, Jan existing home sales fell -4.9% m/m to 4.08 million, weaker than expectations of -2.6% to 4.13 million. On the positive side, the Feb S&P Global manufacturing PMI rose +0.4 to an 8-month high of 51.6, stronger than expectations of 51.4.
Crude has carryover support from this week's drone attack on a Russian pumping station that could reduce Kazakhstan crude oil exports by 30%. Also, crude has support from Wednesday when Bloomberg reported that OPEC+ is considering a delay of monthly supply increases that are currently due to start in April.
Crude oil prices have support from expectations for tighter US sanctions on Iranian oil exports after US Treasury Secretary Bessent said last week the US aims to cut Iranian oil exports by more than 90%. The US Treasury, in early February, sanctioned an international network facilitating the shipment of Iranian crude oil to China.
Crude found support when Politico reported last Monday that 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 weekly rise 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 +1.4% w/w to 73.77 million bbl in the week ended February 14.
OPEC+ said at its monthly meeting on February 3 that it would not change its oil-production plans in the first quarter but would 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. OPEC+ had previously planned to restore 2.2 million bpd of output in monthly installments between January and late 2025. However, the date for the production increase to be completed was pushed back until September 2026. OPEC Jan crude production fell -700,000 bpd to 27.03 million bpd.
Thursday's EIA report showed that (1) US crude oil inventories as of February 14 were -3.6% below the seasonal 5-year average, (2) gasoline inventories were -0.8% below the seasonal 5-year average, and (3) distillate inventories were -11.9% below the 5-year seasonal average. US crude oil production in the week ending February 14 was unchanged w/w at 13.497 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 21 rose by +7 to 488 rigs, moderately 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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