May WTI crude oil (CLK23) on Thursday closed up +0.09 (+0.11%), and May RBOB gasoline (RBJ23) closed down -0.68 (-0.24%).
Crude oil and gasoline prices Thursday settled mixed. A weaker dollar Thursday and the outlook for tighter global oil supplies gave crude prices a boost. However, gains were limited after weekly U.S. jobless claims rose more than expected, signaling softness in the U.S. labor market that is bearish for energy demand and crude prices.
Another bullish factor is the continued halt of Iraqi crude exports from the Turkish port of Ceyhan. Thursday, the Turkish government said it wants to negotiate a $1.5 billion settlement that it has been ordred to pay before it allows the resumption of Iraqi crude exports through its pipeline. 400,000 bpd of oil exports from the Turkish port of Ceyhan have been halted since March 25 after Iraq won an arbitration case from the International Chamber of Commerce that said Turkey violated a 1973 pipeline transit agreement by allowing crude from the Kurdish region to be exported without Iraqi government consent.
Signs of weakness in the U.S. economy are negative for energy demand and crude prices. Thursday's weekly jobless claims report showed weekly initial unemployment claims fell -18,000 to 228,000, showing a weaker labor market than expectations of 200,000. Also, weekly continuing claims rose +6,000 to a 15-month high of 1.823 million, showing a weaker labor market than expectations of 1.700 million.
Crude prices surged Monday after OPEC+ on Sunday announced a surprise oil production cut of more than 1 million bpd starting May 1. Saudi Arabia said the cuts were a "precautionary measure aimed at supporting the stability of the oil market." OPEC Mar crude production fell by -80,000 bpd to 29.16 million bpd.
The outlook for stronger Chinese crude oil demand is bullish for prices. China National Petroleum Corp, the country's largest refiner, predicts that oil demand in China may expand this year by +5.1% to 756 MMT as the country emerges from the pandemic. However, oil demand in China has recently been weak. China car sales in Jan-Feb fell -9.4% y/y and international flights from China were at only 22% of pre-pandemic levels as of March 16.
In a bearish factor, Vortexa Monday reported that the amount of crude stored on tankers that have been stationary for at least a week rose +5.4% w/w to 104.60 million bbl in the week ended March 31.
Rising crude demand in India is bullish for oil prices. India's oil ministry reported on March 22 that India Feb crude oil imports rose +8.5% y/y to 19.1 MMT, the most in seven months.
Wednesday's EIA report showed that (1) U.S. crude oil inventories as of March 31 were +4.1% above the seasonal 5-year average, (2) gasoline inventories were -6.4% below the seasonal 5-year average, and (3) distillate inventories were -11.4% below the 5-year seasonal average. U.S. crude oil production in the week ended March 31 was unchanged at 12.2 million bpd, only 0.9 million bpd (-6.9%) below the Feb-2020 record-high of 13.1 million bpd.
Baker Hughes reported Thursday that active U.S. oil rigs in the week ended April 7 fell by -2 rigs to 590 rigs, moderately below the 2-1/2 year high of 627 rigs posted on December 2. U.S. active oil rigs have more than tripled from the 17-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity.
Crude Prices Modestly Lower On Dollar Strength And Economic Concerns
Dollar Strength And Weak U.S. Economic News Weigh On Crude
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.
