December WTI crude oil (CLZ25) today is down -1.30 (-2.12%), and December RBOB gasoline (RBZ25) is down -0.067 (-0.89%).
Crude oil prices are trading lower amid continued concern about a global oil surplus. Vortexa reported on Monday that crude oil stored on tankers that have been stationary for at least 7 days rose by +12% w/w to 89.75 million bbls in the week ended October 24. Notably, the IEA on October 14 forecasted a record global oil surplus of 4.0 million bpd for 2026.
Also, Bloomberg reported on Monday that OPEC+, at its meeting this weekend, will focus on a base case of a third monthly oil production hike of 137,000 bpd for December. That would be in line with the market consensus. OPEC+ is in the midst of boosting output by a further 1.66 million bpd to fully reverse the 2.2 million bpd production cut seen in early 2024. OPEC's September crude production rose by +400,000 bpd to 29.05 million bpd, the highest in 2.5 years.
Crude oil prices on Monday saw some temporary support from news of a preliminary US-China trade agreement, which is expected to be ratified by President Trump and Xi at a summit on Thursday.
Crude oil prices have continued support from last week's news of increased US and EU sanctions on Russian energy and energy infrastructure. The Trump administration last Wednesday announced sanctions on Rosneft PJSC and Lukoil PJSC, Russia's biggest oil producers, due to "Russia's lack of serious commitment to a peace process to end the war in Ukraine." Meanwhile, the EU adopted a transaction ban on Rosneft and Gazprom Nef and sanctioned 117 additional shadow-fleet vessels and 45 entities that have helped Russia evade sanctions, including 12 companies in China and Hong Kong.
Reduced crude exports from Russia are supportive of oil prices. Ukraine has targeted at least 28 Russian refineries over the past two months, exacerbating a fuel crunch in Russia and limiting Russia's crude export capabilities. Ukrainian drone and missile attacks on Russian refineries and oil export terminals curbed Russia's total seaborne fuel shipments to 1.88 million bpd in the first ten days of October, the lowest average in over 3.25 years.
Last Wednesday's EIA report showed that (1) US crude oil inventories as of October 17 were -4.0% below the seasonal 5-year average, (2) gasoline inventories were -0.6% below the seasonal 5-year average, and (3) distillate inventories were -6.6% below the 5-year seasonal average. US crude oil production in the week ending October 17 fell -0.1% w/w to 13.629 million bpd, falling back from a record high of 13.636 million bpd on the week of October 10.
Baker Hughes reported last Friday that the number of active US oil rigs in the week ending October 24 rose by +2 rigs to 420 rigs, modestly above the 4-year low of 410 rigs from August 1. Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.5-year high of 627 rigs reported in December 2022.
