November WTI Crude Oil (CLX25) closed Wednesday down -0.43 (-0.73%) and November RBOB Gasoline (RBX25) closed up +0.0058 (+0.32%).
Crude oil and gasoline prices closed mixed on Wednesday. Crude oil remains under pressure on concerns about a global supply glut after the IEA on Tuesday forecast a record global oil glut of 4.0 million bpd by 2026. Strength in stocks on Wednesday and a weaker dollar were supportive factors for crude.
On Tuesday, crude oil prices fell to a 5.25-month low following renewed trade tensions with China. A prolonged trade war between the United States and China would affect global economic growth and energy demand and would be bearish for crude oil prices.
Cooling tensions in the Middle East have reduced some of the risk premium in crude oil prices, weighing on crude as the likelihood of disruptions to the region’s crude supplies following the deal between Israel and Hamas decreases.
An increase in crude oil stored in tankers around the world is bearish for oil prices. Vortexa reported on Monday that crude oil stored on tankers that have been parked for at least seven days rose +8.9% p/p to 93.96 million bbl in the week ending October 10.
Crude oil prices found support after OPEC+ agreed on October 5 to a 137,000 bpd increase in its crude production target, starting in November, which was lower than market expectations of a possible 500,000 bpd production increase. OPEC+ is in the midst of increasing production by another 1.66 million bpd to fully reverse the 2.2 million bpd production cut seen in early 2024. OPEC crude oil production in September increased by +400,000 bpd to 29.05 million bpd, the highest in two and a half years.
Reduced crude oil exports from Russia support oil prices. Ukraine has attacked at least 28 Russian refineries in the past two months, exacerbating Russia’s fuel crisis and limiting Russia’s crude oil export capabilities. Ukrainian drone and missile attacks on Russian refineries and oil export terminals have limited Russia’s total seaborne fuel shipments to 1.88 million bpd in the first ten days of October, the lowest average in more than 3.25 years.
The prospects of higher crude oil production in Iraq are expected to boost global oil supplies, which is bearish for crude oil prices. Iraq recently announced that it had reached an agreement with the Kurdistan Regional Government to resume oil exports from the Kurdish region via a pipeline to Turkey, which had been suspended for the past two years due to a dispute over payments. Iraqi Foreign Minister Hussein said the resumption of crude exports could add 500,000 bpd of fresh oil supplies to global markets.