December WTI Crude Oil (CLZ25) today rose +0.94 (+1.56%), and December RBOB Gasoline (RBZ25) rose +0.0412 (+2.09%).
Crude oil and gasoline prices have risen sharply today, with crude oil hitting a one-week high and gasoline hitting a six-week high. Today’s dollar index (DXY00) drop to a 1.5-week low is bullish for energy prices. Crude oil also has support amid expectations that the US government will reopen later this week, which would support economic growth and energy demand.
On Monday, the Senate voted 60-40 to approve a temporary continuing resolution (CR) to fund the government and the House will vote on the measure on Wednesday, when it is expected to pass. If passed, the bill will go to President Trump, who said he will sign it into law. Expectations that the government shutdown will end have sparked risk-on sentiment in asset markets.
Strengthening crude oil demand from China, the world’s second largest crude oil consumer, is supporting prices, after a report last Friday showed China’s crude oil imports from January to October rose +3.1% year-on-year to 471 MMT.
In a bearish factor, Saudi Arabia last Thursday lowered the price of its main grade of crude to Asia for delivery next month to the lowest level in 11 months.
Oil prices are supported by recent reports that the US military may be about to launch military attacks against Venezuela, which is the world’s 12th largest oil producer.
OPEC+, at its November 2 meeting, announced that members will increase production by +137,000 bpd in December, but will then pause production increases in the first quarter of 2026 due to the emerging global oil surplus. In mid-October, the IEA forecast a record global oil surplus of 4.0 million bpd by 2026. OPEC+ is trying to restore the entire 2.2 million bpd production cut it made in early 2024, but still has another 1.2 million bpd of output to restore. OPEC crude oil production in October increased by +50,000 bpd to 29.07 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 three months, exacerbating fuel shortages in Russia and limiting Russia’s crude oil export capabilities. Ukrainian drone and missile attacks on Russian refineries and oil export terminals 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, and have eliminated between 13% and 20% of Russia’s refining capacity by the end of October, reducing production by up to 1.1 million bpd. New US and EU sanctions on Russian oil companies, infrastructure and tankers have also curbed Russian oil exports.