Jan WTI crude oil (CLF24) this morning is +0.71 (+0.93%), and Jan RBOB gasoline (RBF24) is +0.0105 (+0.48%).
Crude oil and gasoline prices are moderately higher this morning. Crude has support on signs of US economic strength after US Q3 GDP expanded more than expected. Also, short coverage ahead of Thursday’s OPEC+ meeting is pushing crude prices higher. A stronger dollar today and a bearish EIA inventory report are limiting gains in crude.
Today’s global economic news was stronger than expected and stronger for energy demand and crude prices. US Q3 GDP was revised up by +0.3 to +5.2% (q/q annualized), stronger than expectations of +5.0%. Also, Eurozone Nov economic confidence rose +0.3 to a 4-month high of 93.8, stronger than expectations of 93.6.
A standoff among OPEC+ members over crude production levels has delayed the group’s monthly meeting until Thursday and is weighing on crude prices. Saudi Arabia, which has unilaterally cut its crude output by 1.0 million bpd since July, is now asking other OPEC+ members to reduce their oil production levels, which has led to a pushback from some African oil producers, including Angola and Nigeria. OPEC+ delegates said they were making progress toward a compromise but had not yet reached an agreement. The divide among OPEC+ members over production levels reduces the likelihood that the group will extend its crude production cuts or make deeper cuts.
A decline in crude in floating storage is bullish for prices. Vortexa’s weekly data from Monday showed that the amount of crude oil held globally on tankers that have been stationary for at least a week fell -2.9% w/w to 86.52 million bbl on November 24.
Increased crude consumption in India, the world’s third largest crude consumer, is bullish for oil prices after India’s consumption of petroleum products 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 3.24 million barrels of oil were shipped from Russian ports in the week to Nov. 26, up +370,000 bpd from the previous week and 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.
Today’s weekly EIA report was bearish for crude and products. EIA crude inventories unexpectedly rose +1.61 million bbl against expectations of a -50,000 bbl draw. Also, EIA gasoline inventories unexpectedly rose +1.76 million bbl against expectations of a -700,000 bbl draw. In addition, EIA distillate stocks unexpectedly rose +5.22 million bbl against expectations of -1.34 million bbl. Finally, crude inventories at Cushing, the WTI futures delivery point, rose +1.85 million bbl.
Today’s EIA report showed that (1) US crude oil inventories through November 24 were +0.2% above the seasonal 5-year average, (2) gasoline inventories were -1.4% below the seasonal 5-year average, and (3) distillate. inventories were -10.0% below the 5-year seasonal average. US crude oil production in the week ended November 24 was unchanged w/w at a record high of 13.2 million bpd.
Baker Hughes reported last Wednesday that active US 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 US oil rig count has fallen 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.
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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.
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