Nov WTI crude oil (CLX24) Monday closed down -0.01 (-0.01%), and Nov RBOB gasoline (RBX24) closed up +0.81 (+0.42%).
Crude oil and gasoline prices settled mixed on Monday. Crude found support from the recent escalation of the conflict between Israel and Hezbollah, which fueled concerns the conflict will widen to include Iran, a supporter of Hezbollah and a major oil producer. Also, Monday's +8% surge in Chinese stocks to a 16-month high has boosted optimism that the Chinese government's economic stimulus measures will also boost crude oil demand. However, crude prices gave up their advance and settled little changed as the dollar strengthened.
Monday's better-than-expected US economic reports support energy demand and crude prices. The Sep MNI Chicago PMI unexpectedly rose +0.5 to 46.6, stronger than expectations of -0.1 to 46.0. Also, the Sep Dallas Fed manufacturing outlook survey unexpectedly rose +0.7 to a 20-month high of -9.0, stronger than expectations of a decline to -10.8.
Gains in crude oil were limited Monday due to a Bloomberg report that said Libyan oil fields that were halted or curtailed by an eastern government ban are expected to start restoring crude output on Tuesday. Earlier this month, Libya's eastern government declared force majeure on all oil fields, terminals, and crude export facilities as it called for a halt to all crude production and exports due to political conflict over who controls the country's central bank and oil revenues.
Crude prices are also weighed down by last Thursday's report from the Financial Times that said Saudi Arabia is ready to abandon its unofficial oil price target of $100 a barrel to regain its market share and is committed to returning its crude production as planned on December 1.
An increase in crude oil held worldwide on tankers is bullish for prices. Vortexa reported today that crude oil stored on tankers that have been stationary for at least seven days rose by +1% w/w to 60.76 million bbl in the week ended September 27.
Crude prices found support after OPEC+ on September 5 agreed to pause its scheduled crude production hike of 180,000 bpd in October and November due to recent weakness in crude prices and signs of fragile global energy demand.
A decline in Russian crude exports is positive for crude. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -390,000 bpd to 2.89 million bpd in the week to September 22. Also, a decline in Russian crude production is positive for oil prices after Russia's Energy Ministry reported last Tuesday that Russia's Aug crude production was 9.059 million bpd, down -30,000 bpd from July but +81,000 bpd above the output target it agreed to with OPEC+.
Last Wednesday's EIA report showed that (1) US crude oil inventories as of September 20 were -5.0% below the seasonal 5-year average, (2) gasoline inventories were -1.0% below the seasonal 5-year average, and (3) distillate inventories were -8.7% below the 5-year seasonal average. US crude oil production in the week ending September 20 was unchanged w/w at 13.2 million bpd, just below the record high of 13.4 million bpd from the week of August 16.
Baker Hughes reported last Friday that active US oil rigs in the week ending September 27 fell -4 rigs to 484 rigs, modestly above the 2-1/2 year low of 477 rigs posted in the week ending July 19. The number of US oil rigs has fallen over the past year from the 4-year high of 627 rigs posted 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.
