December WTI crude oil (CLZ24) Thursday closed up +0.27 (+0.39%), and December RBOB gasoline (RBZ24) closed up +0.0166 (+0.84%).
Crude oil and gasoline prices on Thursday posted moderate gains after weekly EIA gasoline and distillate supplies unexpectedly declined, a sign of stronger fuel demand. Gains in crude were limited after the dollar index (DXY00) rallied to a 1-year high and after the IEA forecast a global oil surplus next year.
On Thursday, the International Energy Agency said global oil markets face a surplus of more than 1 million bpd in 2025 as Chinese oil consumption is expected to continue to decline. It also said the crude glut could be even larger if OPEC+ decides to proceed with plans to revive its crude production.
Global energy demand concerns undercut crude prices after OPEC on Tuesday cut its 2024 global oil consumption forecast to 1.8 million bpd, -107,000 bpd lower than last month's forecast, and the fourth consecutive month the cartel has reduced its crude demand estimates.
Crude demand in China has weakened and is a bearish factor for oil prices. According to Chinese customs data, China Oct crude imports fell -2% m/m and -9% y/y to 44.7 MMT, and crude imports year-to-date are down -3.4% y/y at 457.074 MMT. China is the world's second-largest crude consumer.
Concerns that Middle East hostilities could escalate are bullish for crude when Iranian supreme leader Ayatollah Ali Khamenei warned of a "crushing response" to Israel's recent air strikes on Iran. An escalation of hostilities between Iran and Israel could widen the conflict in the Middle East and disrupt the region's crude supplies.
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 -0.4% w/w to 61.78 million bbl in the week ended November 8.
An increase in Russian crude exports is bearish for crude. Weekly vessel-tracking data from Bloomberg showed Russian crude exports rose by +260,000 bpd to 3.42 million bpd in the week to November 10. Separately, Russia's Energy Ministry reported on October 23 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+.
Thursday's weekly EIA report was mixed for crude and products. On the bullish side, EIA gasoline supplies unexpectedly fell -4.4 million bbl to a 2-year low versus expectations of a +1.0 million bl build. Also, EIA distillate stockpiles unexpectedly fell -1.39 million bbl versus expectations of a +1.27 million bbl build. In addition, crude supplies at Cushing, the delivery point for WTI futures, fell by -688,000 bbl. On the negative side, EIA crude inventories rose +2.09 million bbl, a larger build than expectations of +1.6 million bbl.
Thursday's EIA report showed that (1) US crude oil inventories as of November 8 were -4.4% below the seasonal 5-year average, (2) gasoline inventories were -4.3% below the seasonal 5-year average, and (3) distillate inventories were -5.4% below the 5-year seasonal average. US crude oil production in the week ending November 8 fell -0.7% w/w to 13.4 million bpd, falling back from the record 13.5 million bpd in the prior week.
Baker Hughes reported last Friday that active US oil rigs in the week ending November 8 were unchanged at 479 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.
