Crude Oil Prices Fall on Possible Progress on Ukraine-Russia Peace Deal

February WTI crude oil (CLG26) on Friday closed down -1.61 (-2.76%), and February RBOB gasoline (RBG26) closed down -0.0467 (-2.66%).

Crude oil costs fell sharply resulting from doable progress on a Ukraine-Russia peace deal.  Ukrainian President Zelensky mentioned on Friday that he expects to fulfill with President Trump on Sunday in Florida.  Mr. Zelensky mentioned a 20-point peace plan is 90% prepared, nevertheless it is determined by the assembly with Mr. Trump and cannot be finalized with out enter from Russia and Europe.  Russia reportedly mentioned that the 20-point peace plan fails to reply many questions.

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Oil costs have assist after the US on Thursday launched strikes on ISIS targets in Nigeria in a safety and intelligence collaboration with the Nigerian authorities to fight rising terrorist assaults within the nation.  Nigeria is an OPEC member.  Mr. Trump beforehand warned that the US would strike ISIS in Nigeria if the group didn’t cease killing Christians.

Oil costs have assist from the US blockade of sanctioned oil tankers concerned with Venezuelan oil shipments.  The US Coast Guard pressured the sanctioned oil tanker Bella 1 to show away from Venezuela and head out into the Atlantic Ocean earlier this week, in keeping with a Bloomberg report.  US forces have been shadowing the vessel as a part of President Trump’s blockade.  US forces needed to board Bella 1 close to Barbados on Sunday, however the vessel as an alternative moved again out into the Atlantic Ocean.

The US Power Info Administration (EIA) introduced that this week’s EIA report will probably be launched on Monday, December 29, as a result of Christmas vacation.

Vortexa reported Monday that crude oil saved on tankers which have been stationary for at the very least 7 days fell -7% w/w to 107.15 million bbl within the week ended December 19.

Ukrainian drone and missile assaults have focused at the very least 28 Russian refineries over the previous three months, limiting Russia’s crude oil export capabilities and decreasing international oil provides.  Additionally, for the reason that finish of November, Ukraine has ramped up assaults on Russian tankers, with at the very least six tankers attacked by drones and missiles within the Baltic Sea.  As well as, new US and EU sanctions on Russian oil corporations, infrastructure, and tankers have curbed Russian oil exports.

Crude additionally garnered assist after OPEC+ on November 30 mentioned it could persist with its plan to pause manufacturing will increase in Q1 of 2026.  OPEC+ at its November 2 assembly introduced that members would elevate manufacturing by +137,000 bpd in December however will then pause the manufacturing hikes in Q1-2026 as a result of rising international oil surplus.  The IEA in mid-October forecasted a report international oil surplus of 4.0 million bpd for 2026.  OPEC+ is attempting to revive the entire 2.2 million bpd manufacturing reduce it made in early 2024, however nonetheless has one other 1.2 million bpd of manufacturing left to revive.  OPEC’s November crude manufacturing fell by -10,000 bpd to 29.09 million bpd.

Final month, OPEC revised its Q3 international oil market estimates from a deficit to a surplus, as US manufacturing exceeded expectations and OPEC additionally ramped up crude output.  OPEC mentioned it now sees a 500,000 bpd surplus in international oil markets in Q3, versus the earlier month’s estimate for a -400,000 bpd deficit.  Additionally, the EIA raised its 2025 US crude manufacturing estimate to 13.59 million bpd from 13.53 million bpd final month.

Final Wednesday’s EIA report confirmed that (1) US crude oil inventories as of December 12 have been -4.0% beneath the seasonal 5-year common, (2) gasoline inventories have been -0.4% beneath the seasonal 5-year common, and (3) distillate inventories have been -5.7% beneath the 5-year seasonal common.  US crude oil manufacturing within the week ending December 12 fell -0.1% w/w to 13.843 million bpd, just under the report excessive of 13.862 million bpd from the week of November 7.

Baker Hughes reported Tuesday that the variety of lively US oil rigs within the week ended December 26 rose by +3 rigs to 409 rigs, recovering barely from the 4.25-year low of 406 rigs posted within the week ended December 19.  Over the previous 2.5 years, the variety of US oil rigs has fallen sharply from the 5.5-year excessive of 627 rigs reported in December 2022. 

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