January WTI crude oil (CLF24) this morning is down -0.32 (-0.42%), and Jan RBOB gasoline (RBF24) is down -0.0032 (-0.15%).
Crude oil and gasoline prices are moderately lower this morning. Crude prices are under pressure on concerns about global energy demands after today’s economic news showed that US and Japanese manufacturing activity fell more than expected. Today’s weaker dollar is limiting losses in crude, along with news that OPEC+ is close to resolving a dispute over production quotas that forced the group to postpone its monthly meeting.
Today’s global manufacturing news was worse than expected and bearish for energy demand and crude prices. The US New S&P manufacturing PMI fell -0.6 to 49.4, weaker than expectations of 49.9. Also, Japan Nov Jibun Bank’s manufacturing PMI fell -0.6 to 48.1, the steepest rate of contraction in 9 months. Crude prices recovered from their worst levels today after delegates said OPEC and its partners were reviewing demands made by Angola and Nigeria, which want higher crude production levels than other OPEC+ members were willing to agree to. The split among OPEC+ members over production levels reduces the likelihood that the group will extend its crude production cuts or make deeper cuts when they meet on November 30.
Expectations of an increase in US travel over the Thanksgiving holiday are supporting fuel demand and crude prices. According to the forecast of the American Automobile Association (AAA), 55.4 million Americans are expected to travel 50 miles or more from home during the holiday, the third largest in records since 2000.
An increase in crude in floating storage is bearish for prices. Vortexa’s weekly data from Monday showed that the amount of oil held globally on tankers that have been stationary for at least a week rose +24% w/w to 87.987 million bbl as of November 17.
Increased crude consumption in India, the world’s third largest crude consumer, is bullish for oil prices after India’s oil product consumption in October rose +3.7% y/y to 19.3 MMT, a five-month high.
An increase in Russian crude exports is bearish for oil prices. Tanker tracking data monitored by Bloomberg show that 3.2 million bpd of crude was shipped from Russian ports in the four weeks to Nov. 12, near the highest in four months.
The tension in the oil market is expected to continue due to the extension of OPEC+ production cuts. Saudi Arabia recently said it would maintain its unilateral crude output of 1.0 million bpd until December. The move will keep Saudi Arabia’s crude output at about 9 million bpd, the lowest level in three years. Russia also recently announced that it would maintain its 300,000 bpd cut in crude output until December. OPEC Oct crude output was little changed, rising +50,000 bpd to 28.08 million bpd.
Wednesday’s EIA report showed that (1) U.S. crude oil inventories through November 17 were -0.5% below the seasonal 5-year average, (2) gasoline inventories were -1.4% below the seasonal 5-year average, and (3) distillate. inventories were -13.7% below the 5-year seasonal average. US crude oil production in the week ended November 17 was unchanged w/w at a record high of 13.2 million bpd.
Baker Hughes reported Wednesday that active U.S. oil rigs in the week ended Nov. 24 were unchanged at 500 rigs, modestly above the 1-3/4-year low of 494 rigs dated Nov. 10. The number of US oil rigs fell this year after moving. sharply higher during 2021-22 from the 18-year pandemic low of 172 rigs posted in August 2020 to a 3-1/2-year high of 627 rigs in December 2022.
More Crude News from Barchart
As of 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 for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.