December WTI crude oil (CLZ24) today is up +0.95 (+1.37%), and December RBOB gasoline (RBZ24) is up +0.0169 (+0.86%).
Crude oil and gasoline prices are climbing today on concern that hostilities in the Middle East may escalate and disrupt crude supplies. There was a report from Axios today that Iran may be preparing to attack Israel from Iraqi territory in the coming days. Also, a pickup in Chinese manufacturing activity supported energy demand and crude prices. Gains in crude were limited by a stronger dollar and weaker-than-expected US economic reports.
Crude prices jumped today after Axios reported that Iran is planning a strike against Israel through militias it backs in Iraq, with the assault expected to be carried out in the coming days using drones and ballistic missiles.
Economic news from Asia was better-than-expected and positive for crude demand and prices. The China Caixin Oct manufacturing PMI rose +1.0 to 50.3, stronger than expectations of 49.7. Also, the Japan Oct Jibun Bank manufacturing PMI was revised upward by +0.2 to 49.2 from the previously reported 49.0.
Today's US economic news was negative for energy demand and crude prices. Oct nonfarm payrolls rose +12,000, weaker than expectation of +100,000 and the smallest increase in 3-3/4 years. Also, the Oct ISM manufacturing index unexpectedly fell -0.7 to a 15-month low of 46.5, weaker than expectations of an increase to 47.6.
In a bullish factor for crude, Reuters reported Wednesday that OPEC+ could delay a planned +180,000 bpd hike in oil production scheduled to take effect in December by a month or more, citing concerns about soft global oil demand and rising supply. Today's news showed OPEC Oct crude production rose +370,000 bpd to 26.9 million bpd.
A decline in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -18% w/w to 55.49 million bbl in the week ended October 25.
Crude demand in China has weakened and is a bearish factor for oil prices. According to data compiled by Bloomberg, China's total apparent oil demand in Sep fell -6.98% y/y to 14.176 million bpd, and total Chinese oil demand this year (Jan-Sep) is down -3.8% y/y to 13.99 million bpd.
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. However, the Financial Times reported on September 26 that 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 Russian crude exports is bearish for crude. Weekly vessel-tracking data from Bloomberg showed Russian crude exports rose by +120,000 bpd to 3.54 million bpd in the week to October 27. However, Russia's Energy Ministry reported last 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 October 25 were -4.2% below the seasonal 5-year average, (2) gasoline inventories were -3.5% below the seasonal 5-year average, and (3) distillate inventories were -8.8% below the 5-year seasonal average. US crude oil production in the week ending October 25 was unchanged w/w at a record 13.5 million bpd.
Baker Hughes reported last Friday that active US oil rigs in the week ending October 25 fell by -2 rigs to 480 rigs, just 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.
