October WTI crude oil (CLV25) today is up +0.31 (+0.49%), and October RBOB gasoline (RBV25) is up +0.0037 (+0.19%).
Crude oil and gasoline prices recovered from early losses today and are posting moderate gains as short covering pushed prices higher after the weekly EIA report showed declines in crude inventories and supplies at Cushing. Crude oil prices initially moved lower today due to a stronger dollar.
Global crude supply concerns eased after Russia announced on Tuesday that its Volgograd refinery, which can process 300,000 bpd of crude oil, will resume operations a week earlier than planned, as repairs to the refinery were made following drone attacks by Ukraine.
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 +11% w/w to 96.77 million bbl in the week ended August 22.
Crude prices also have support on concern that the Russian-Ukrainian war will continue, which could keep restrictions on Russian crude exports in place, and even secondary restrictions could be added. Russian Foreign Minister Lavrov said Sunday that there was no meeting planned between the leaders of Russia and Ukraine and that there "needs to be an agenda first" for a meeting to take place. "This agenda is not ready at all."
Concerns about higher OPEC production are negative for 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.
Today's weekly EIA report was mixed for crude and products. On the bullish side, EIA crude inventories fell -2.39 million bbl, a larger draw than expectations of -2.0 million bbl. Also, EIA distillate inventories unexpectedly fell -1.8 million bbl versus expectations of a +500,000 bbl build. In addition, crude supplies at Cushing, the delivery point of WTI futures, fell by -838,000 bbl. On the negative side, EIA gasoline stockpiles fell -1.2 million bbl, a smaller decline than expectations of -1.6 million bbl.
Today's weekly EIA report showed that (1) US crude oil inventories as of August 22 were -5.2% below the seasonal 5-year average, (2) gasoline inventories were -0.3% below the seasonal 5-year average, and (3) distillate inventories were -14.8% below the 5-year seasonal average. US crude oil production in the week ending August 22 rose by +0.4% w/w to 13.439 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 22 fell by -1 to 411 rigs, just 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.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
