Today January WTI Crude Oil (CLF26) rose +0.76 (+1.38%) and January RBOB Gasoline (RBF26) rose +0.0166 (+0.99%).
Crude oil and gasoline prices are rising today amid increased geopolitical risks in Venezuela and Russia. President Trump ordered a blockade of sanctioned tankers off Venezuela, and the United States is preparing new sanctions on Russian energy exports if Russia rejects a peace deal to end the war in Ukraine. Crude oil prices retreated from their peak after EIA weekly crude inventories fell less than expected and gasoline supplies rose more than expected.
Crude oil prices rose today amid escalating global geopolitical tensions. President Trump last night ordered a “total and complete blockade of all sanctioned oil tankers” entering and leaving Venezuela. Additionally, the United States is considering increasing sanctions on Russian energy exports and attacking the Russian fleet of oil tankers and shadow traders that facilitate its exports if President Putin rejects a proposed peace deal with Ukraine.
The weakness of the crude oil crack spread is a negative factor for oil prices. The crack spread fell today to its lowest level in six months, discouraging refiners from buying crude oil and refining it into gasoline and distillates.
Vortexa reported on Monday that crude oil stored on tankers that have been parked for at least 7 days increased +5.1 p/p to 120.23 million bbl in the week ending December 12.
Reduced crude oil exports from Russia are propping up crude oil prices. On November 19, Vortexa data showed that Russia’s oil product shipments fell to 1.7 million bpd in the first 15 days of November, the lowest level in more than three years. 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 recently damaged a Russian oil terminal in the Baltic Sea, forcing it to shut down. The Caspian Pipeline Consortium, which transports 1.6 million bpd of Kazakhstan’s crude exports, was forced to shut down after a pipeline was damaged at one of its berths. New US and EU sanctions on Russian oil companies, infrastructure and tankers have also curbed Russian oil exports.
Crude oil also gained support after OPEC+ said on November 30 that it would maintain its plans to pause production increases in the first quarter of 2026. OPEC+, at its meeting on November 2, announced that its 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 November fell -10,000 bpd to 29.09 million bpd.
Last month, OPEC revised its third-quarter global oil market estimates from a deficit to a surplus, as U.S. production exceeded expectations and OPEC also increased crude output. OPEC said it now sees a surplus of 500,000 bpd in global oil markets in the third quarter, up from the previous month’s estimate of a deficit of -400,000 bpd. Additionally, the EIA raised its 2025 U.S. crude production estimate to 13.59 million bpd from 13.53 million bpd last month.
Today’s EIA weekly report was mainly bearish for crude oil and its products. EIA crude oil inventories fell by -1.27 million bbl, a smaller drop than expectations of -2.05 million bbl. Additionally, EIA gasoline supplies increased +4.81 million bbl to a 4-month high, a larger increase than expectations of +1.95 million bbl. On the positive side, crude oil reserves at Cushing, the delivery point for WTI futures, fell -742,000 bbl.
Today’s EIA report showed that (1) U.S. crude oil inventories as of December 12 were -4.0% below the 5-year seasonal average, (2) gasoline inventories were -0.4% below the 5-year seasonal average, and (3) distillate inventories were -5.7% below the 5-year seasonal average. US crude oil production in the week ending December 12 fell -0.1% p/p to 13.843 million bpd, just below the record of 13.862 million bpd for the week of November 7.
Baker Hughes reported last Friday that the number of active US oil rigs in the week ending December 12 increased by +1 to 414 rigs, modestly above the 4-year low of 407 rigs reported on November 28. Over the past 2.5 years, the number of oil rigs in the US has fallen sharply from the 5.5-year high of 627 rigs reported in December 2022.
On the date of publication, Rich Asplund had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
