Crude oil and gasoline prices saw moderate increases today, with February WTI crude oil (CLG25) rising by $0.70 (+1.01%) and February RBOB gasoline (RBG25) up by $0.0102 (+0.52%). The price boost is primarily due to a weaker dollar, which has supported commodities across the market.
Additionally, crude oil prices received support from a report by the American Petroleum Institute (API) on Tuesday, which indicated a reduction of 3.2 million barrels in U.S. crude inventories last week. Due to the Christmas holiday, the U.S. Energy Information Administration (EIA) will release its weekly crude inventory data later today.
This week, oil prices have also been bolstered by reports that China plans to implement additional economic stimulus measures aimed at reviving its economy. Furthermore, ongoing geopolitical tensions continue to support prices, particularly after President-Elect Donald Trump made a statement over the weekend threatening to take control of the Panama Canal if transit rates are not reduced. This added to his rhetoric on tariffs and increased sanctions.
The potential for new sanctions on Iranian and Russian crude exports is another factor fueling bullish sentiment. Mike Walz, Trump’s choice for National Security Adviser, has promised a return to “maximum pressure” on Iran, while the Biden administration is reportedly considering harsher sanctions on Russian crude oil exports.
However, bearish factors also affect the market. A rise in crude oil stored on tankers has put downward pressure on prices. Vortexa reported that crude oil held on stationary tankers for over seven days rose by 7% week-over-week to 70.2 million barrels as of December 20.
Earlier this month, OPEC+ supported crude prices by postponing a planned increase in crude production by 180,000 barrels per day (bpd) from January to April. They also announced that they would ease production cuts at a slower pace. The United Arab Emirates (UAE) has agreed to delay a 300,000 bpd increase in its production target, which had been planned for January. Additionally, OPEC+ has revised its output restoration plan, now delaying the return of 2.2 million bpd until September 2026, instead of the previous target of late 2025. In November, OPEC’s crude production rose by 120,000 bpd to 27.02 million bpd.
The ongoing Ukraine-Russian war remains a key factor in oil price support. Tensions escalated further when Russia launched a hypersonic missile into the Ukrainian city of Dnipro, following Ukraine’s increased use of Western-supplied long-range missiles. Russian President Vladimir Putin has also threatened to target “decision-making centers” in Kyiv with ballistic missiles and has approved an updated nuclear doctrine allowing for nuclear strikes in response to conventional attacks.
On the demand side, weakening crude oil demand from China is seen as a bearish influence. Data from Bloomberg revealed that China’s oil demand fell by 2.14% year-over-year in November to 14.013 million bpd, with total demand for the January-November period declining by 3.26% to 13.996 million bpd. As the world’s second-largest crude consumer, China’s reduced demand has added pressure on the market.
A decrease in Russian crude exports has offered some support to prices. Bloomberg’s vessel-tracking data showed that Russian crude exports fell by 170,000 bpd to 2.97 million bpd in the week ending December 15.
Looking ahead, the market is expecting the weekly EIA crude inventory report to show a decline of 600,000 barrels, while gasoline stocks are anticipated to fall by 500,000 barrels.
Last week’s EIA data revealed that U.S. crude inventories were 5.9% below the seasonal five-year average as of December 13. Gasoline inventories were 3.3% below the average, and distillate stocks were 7.0% lower than the seasonal norm. U.S. crude oil production fell by 0.2% week-over-week to 13.604 million bpd during the week ending December 13, slightly below the previous week’s record level of 13.631 million bpd.
Baker Hughes reported last Friday that the number of active U.S. oil rigs increased by one to 483 rigs in the week ending December 20, modestly above the 2¾-year low of 477 rigs reached last month. The number of active rigs has decreased from a high of 627 rigs in December 2022, reflecting the ongoing trends in U.S. oil production.
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