Oct WTI crude oil (CLV24) today is down -0.44 (-0.62%), and Oct RBOB gasoline (RBV24) is down -0.38 (-0.19%).
Crude oil and gasoline prices today are moderately lower. Crude is under pressure today on concerns about Chinese energy demand after two Chinese refiners run by Sinochem Group declared bankruptcy due to lackluster demand and poor refining margins. Crude has support on concerns of escalation of hostilities in the Middle East after Lebanon accused Israel of orchestrating an attack that killed several people and wounded nearly 3,000 when their pagers exploded. Crude prices also found support on today's bullish weekly EIA report.
Today's US economic reports showed strength that supports energy demand and prices. Aug housing starts rose +9.6% m/m to a 4-month high of 1.356 million, stronger than expectations of 1.318 million. Also, Aug building permits, a proxy for future construction, rose +4.9% m/m to a 5-month high of 1.475 million, stronger than expectations of 1.410 million.
Concerns that the Israel-Hamas war could escalate into Lebanon and lead to disruption of Middle Eastern crude supplies are bullish for crude prices higher. On Tuesday, Lebanon accused Israel of installing malware or explosives in pagers used by the Lebanese people that caused the devices to explode, which left nearly 1,500 Hezbollah militants injured. Pagers are used by Hezbollah fighters for most of their communications on the belief they can avoid interceptions by Israeli intelligence.
Reduced Libyan oil production and exports support oil prices as UN-led talks failed to break an impasse in Libya over control of the country's central bank, leading to reduced crude exports. Libya's crude exports fell to 314,000 bpd last week from 468,00 bpd at the beginning of this month. 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.
Signs of weakness in European fuel demand are bearish for crude prices after Italian refiner Eni SpA and Spain's Repsol SA, which together account for about 13% of Europe's oil refining capacity, said they were reducing processing at their plants because of weak margins, a sign of lackluster fuel demand in Europe.
A decline in crude oil held worldwide on tankers is bullish for prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -1.5% w/w to 65.53 million bbl in the week ended September 13.
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.
An increase in Russian crude exports is negative for crude. Weekly vessel-tracking data from Bloomberg showed Russian crude exports rose by +110,000 bpd to 3.25 million bpd in the week to September 15. Meanwhile, 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+.
Today's weekly EIA report was bullish for crude. EIA crude inventories fell -1.63 million bbl to an 11-month low, a larger draw than expectations of -100,000 bbl. EIA gasoline supplies rose +69,000 bbl, a smaller build than expectations of +1.0 million bbl. In addition, EIA distillate stockpiles rose +125,000 bbl, a smaller build than expectations of +1.0 million bbl. Finally, crude supplies at Cushing, the delivery point of WTI futures, fell -1.98 million bbl to a 10-1/2 month low.
Today's EIA report showed that (1) US crude oil inventories as of September 13 were -4.2% below the seasonal 5-year average, (2) gasoline inventories were -0.5% below the seasonal 5-year average, and (3) distillate inventories were -8.6% below the 5-year seasonal average. US crude oil production in the week ending September 13 fell -0.8% w/w to 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 13 rose by +5 rigs to 488 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.
