Nov WTI crude oil (CLX24) today is up +0.98 (+1.33%), and Nov RBOB gasoline (RBX24) is up +0.92 (+0.44%).
Crude oil and gasoline prices today added to Thursday's sharp gains and posted 5-week highs. Crude prices have rallied sharply in the past two sessions on concern Israel will target Iran's oil facilities in retaliation for Iran’s missile attack on Israel. Crude prices also garnered support from today's stronger-than-expected US Sep payroll report, which signals economic strength and is bullish for fuel demand and oil prices. Crude fell back from its best levels today after the dollar index (DXY00) rallied to a 7-week high.
Crude prices are underpinned after US President Biden said Thursday that he was "discussing" with Israel if it were to decide to retaliate against Iran for its missile attack on Israel by bombing Iran's oil facilities. Citigroup estimates that a major strike on Iran's oil export capacity could take 1.5 million bpd of crude off the global market.
Today's global economic news is better than expected and bullish for energy demand and crude prices. US Sep nonfarm payrolls rose +254,000, showing a stronger labor market than expectations of +150,000 and the largest increase in 6 months. Also, the US Sep unemployment rate unexpectedly fell -0.1 to 4.1%, showing a stronger labor market than expectations of no change at 4.2%. In addition, French Aug industrial production rose +1.4% m/m, stronger than expectations of +0.3% m/m and the largest increase in 15 months.
A bearish factor for crude oil is the expectation for Libyan oil fields to restore crude output this week. 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 were undercut 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 Monday 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.
An increase in Russian crude exports is bearish for crude. Weekly vessel-tracking data from Bloomberg showed Russian crude exports rose by +850,000 bpd to 3.74 million bpd in the week to September 29, a 3-month high. However, Russia's Energy Ministry reported Wednesday that Russia's Sep crude production was 8.97 million bpd, down -13,000 bpd from Aug and just below the 8.98 million bpd output target it agreed to with OPEC+.
Wednesday's EIA report showed that (1) US crude oil inventories as of September 27 were -4.2% below the seasonal 5-year average, (2) gasoline inventories were -0.8% below the seasonal 5-year average, and (3) distillate inventories were -8.3% below the 5-year seasonal average. US crude oil production in the week ending September 27 rose +0.8% w/w to 13.3 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.
