November WTI crude oil (CLX25) today is down -0.07 (-0.12%), and November RBOB gasoline (RBX25) is up +0.0128 (+0.71%).
Crude oil and gasoline prices are mixed today, with crude posting a 5.25-month low and gasoline recovering from a 4.5-year nearest-futures low. Today's recovery in the dollar from a 1.5-week low to higher on the day is undercutting crude prices. Crude is 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.
Losses in crude are limited due to an easing of US-China trade tensions, which is supportive for global growth prospects and energy demand. President Trump said today that current tariffs on China were "not sustainable" and affirmed that he will meet with Chinese President Xi Jinping at the end of the month in South Korea.
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 last Friday that the number of active US oil rigs in the week ending October 10 fell by -4 to 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.
