Rich Asplund – Barchart – 51 minutes ago
April WTI crude oil (CLJ25) on Friday closed up +0.63 (+0.95%), and April RBOB gasoline (RBJ25) closed up +0.156 (+0.73%).
Crude oil prices on Friday closed moderately higher. Friday’s weaker dollar was supportive of crude prices. Crude prices also rose after the US tightened sanctions on Russia to make it more difficult for Russia to finance its crude oil trade, potentially tightening global oil supplies. Oil prices also saw support at the US imposed sanctions on Iran’s oil minister. Oil prices saw support on lukewarm Russian support for a ceasefire, which suggests that the war and Russian sanctions will continue.
On the bearish side for oil prices, the markets remain concerned that US tariffs and retaliatory tariffs will curb global growth and undercut energy demand. Also, Friday’s decline in the University of Michigan’s March US consumer sentiment index to a 2-1/3 year low of 57.9 was bearish for energy demand and crude prices.
Crude prices were supported Friday after the US let a license expire covering payments for energy to Russian banks that were still allowed to receive payments in US dollars, tightening sanctions on Russia by restricting payment for energy in an attempt to get Russia to agree to a ceasefire in Ukraine.
In a bearish factor, the IEA on Thursday cut its 2025 global crude consumption forecast by about 100,000 bpd to about 1 million bpd and projected a global crude surplus this year of 600,000 bpd, which could widen by another 400,000 bpd due to the announcement from OPEC+ that it will restart some halted crude output.
Crude prices found support last Thursday when US Energy Secretary Wright said that he plans to seek up to $20 billion to refill the Strategic Petroleum Reserve, which currently stands at 395 million bbl but can hold a maximum of 700 million bbl.
Ramped-up Russian oil exports are negative for crude prices after data compiled by Bloomberg from analytics firm Vortexa showed Russian Feb oil products exports reached a 1-year high of 2.5 million bpd.
Crude prices were undercut when OPEC+ said last Monday it would restart some halted crude output in April, adding 138,000 bpd to global supplies. That is the first of a series of monthly hikes to reverse the 2-year-long production cut, which will gradually restore a total of 2.2 million bpd. OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won’t be fully restored until September 2026. OPEC Feb crude production rose +320,000 bpd to a 14-month high of 27.35 million bpd.
In a supportive factor for crude oil prices, the US on January 10 imposed new sanctions on Russia’s oil industry that could curb global oil supplies. The measures targeted Gazprom Neft and Surgutneftgas, which exported about 970,000 bpd of Russian crude in the first 10 months of 2024, accounting for about 30% of its tanker flow, according to Bloomberg data. The US also targeted insurers and traders linked to hundreds of tanker cargoes. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -45,000 bpd to 3.48 million bpd in the week to March 9.
Crude oil demand in China has weakened and is a bearish factor for oil prices. According to Chinese customs data, China’s 2024 crude imports fell -1.9% y/y to 553 MMT. China is the world’s biggest crude importer.
An increase in crude oil held worldwide on tankers is bearish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days rose by +4.9% w/w to 84.15 million bbl in the week ended March 7.
Wednesday’s EIA report showed that (1) US crude oil inventories as of March 7 were -5.1% below the seasonal 5-year average, (2) gasoline inventories were +1.3% above the seasonal 5-year average, and (3) distillate inventories were -4.8% below the 5-year seasonal average. US crude oil production in the week ending March 7 rose +0.5% w/w to 13.575 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6.
Baker Hughes reported Friday that active US oil rigs in the week ending March 14 rose +1 rig to 487 rigs, mildly above the 3-year low of 472 rigs posted on January 24. The number of US oil rigs has fallen over the past two years from the 4-1/2 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.