September WTI crude oil (CLU25) on Monday closed up +0.62 (+0.99%), and September RBOB gasoline (RBU25) closed up +0.0262 (+1.26%).
Crude oil prices on Monday settled higher on speculation that there will be no resolution to the Russian-Ukrainian war anytime soon, which could lead to secondary sanctions on Russian crude exports that tighten the global oil supply. Dollar strength on Monday limited gains in crude.
Crude prices are awaiting any details of the results of Monday's meeting between Presidents Trump and Zelenskiy in Washington. Any resolution to the Russian-Ukrainian war could be bearish for crude prices, as an end to the war could mean allowing Russian crude to trade freely and could lead to an end to sanctions on Russian energy exports. Crude prices are also under pressure after President Trump signaled he was in no hurry to ramp up secondary sanctions on Russian energy exports if there was no quick end to the war.
Concern about higher OPEC production is weighing on crude prices after OPEC+ on August 2 endorsed an additional 547,000 bpd increase in its crude production for September 1. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production by September 2026. OPEC+ has 1.66 million bpd of supplies that are currently due to remain offline until late 2026. OPEC July crude production fell by -20,000 bpd to 28.31 million bpd.
A decline in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported today that crude oil stored on tankers that have been stationary for at least seven days fell by -12% w/w to 82.49 million bbl in the week ended August 15.
Last Wednesday's weekly EIA report showed that US crude oil inventories rose +3.04 million bbls to a 2-month high in the week ended August 8. The weekly EIA report showed that (1) US crude oil inventories as of August 8 were -5.1% below the seasonal 5-year average, (2) gasoline inventories were +0.25% above the seasonal 5-year average, and (3) distillate inventories were -15.45% below the 5-year seasonal average. US crude oil production in the week ending August 8 rose by +0.3% y/y to 13.327 million bpd, modestly below the record high of 13.631 million bpd posted in the week of 12/6/2024.
Baker Hughes reported last Friday that the number of active US oil rigs in the week ending August 15 was unchanged at 411 rigs, just slightly above the 3.75-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 5.25-year high of 627 rigs reported in December 2022.
