November WTI crude oil (CLX25) on Friday closed up +0.08 (+0.14%), and November RBOB gasoline (RBX25) closed up +0.0260 (+1.44%).
Crude oil and gasoline prices recovered from early losses on Friday and settled higher. Crude prices found support on Friday as US-China trade tensions eased, which is supportive for global growth prospects and energy demand. President Trump said on Friday that the current tariffs on China are "not sustainable" and affirmed that he will meet with Chinese President Xi Jinping at the end of the month in South Korea.
Gasoline prices also jumped on Friday due to supply concerns following a fire at BP's refinery in Whiting, Indiana, which reduced production rates. The Whiting refinery is the largest inland refinery in the US with a total crude processing capacity of 435,000 bpd.
On Friday, crude initially fell to a 5.25-month low and gasoline slid to a 4.5-year nearest-futures low. Friday's recovery in the dollar index from a 1.5-week low to higher on the day was negative for crude prices. Crude was also under pressure due to negative carryover from Thursday, when President Trump said he'll meet with Russian President Putin to discuss ending the war in Ukraine, which raises the possibility of more supply as Russian oil supplies are allowed to flow.
Crude oil is also under pressure on concerns about a global supply glut. On Tuesday, the IEA forecast a record global oil surplus of 4.0 million bpd for 2026.
Cooling tensions in the Middle East have reduced some of the risk premium in crude prices, weighing on crude as it decreases the likelihood of disruptions to the region's crude supplies following the agreement between Israel and Hamas.
An increase in crude oil held worldwide on tankers is bearish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days rose by +8.9% w/w to 93.96 million bbl in the week ended October 10.
Crude prices found support after OPEC+ on October 5 agreed to a 137,000 bpd increase in its crude production target, starting in November, which was less than market expectations of a potential 500,000 bpd boost to production. 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.
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 have 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.
The outlook for higher crude production in Iraq is expected to boost global oil supplies, which is bearish for crude prices. Iraq recently announced that it had reached an agreement with the regional government of Kurdistan to resume oil exports from the Kurdish region via a pipeline to Turkey, which had been halted for the past two years due to a payment dispute. Iraqi Foreign Minister Hussein said that the resumption of crude exports could add 500,000 bpd of fresh oil supplies to global markets.
Crude prices have support from concerns that the ongoing war in Ukraine could lead to additional sanctions on Russian energy exports, reducing global oil supplies. The US proposed that the G7 allies impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince Russia to end the war in Ukraine.
Thursday's EIA report showed that (1) US crude oil inventories as of October 10 were -3.4% below the seasonal 5-year average, (2) gasoline inventories were +0.1% above the seasonal 5-year average, and (3) distillate inventories were -6.9% below the 5-year seasonal average. US crude oil production in the week ending October 10 rose +0.1% w/w to a record 13.636 million bpd.
Baker Hughes reported Friday that the number of active US oil rigs in the week ending October 17 was unchanged at 418 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.
