Crude Prices Retreat on Dollar Strength and Possible Ukraine Peace Deal

December WTI crude oil (CLZ25) immediately is down -1.47 (-2.42%), and December RBOB gasoline (RBZ25) is down -0.0612 (-3.06%).

Crude oil and gasoline costs are sharply decrease immediately, with gasoline falling to a 1.5-week low.  As we speak’s rally within the greenback index (DXY00) to a 1.5-week excessive is bearish for vitality costs.  Crude costs are additionally beneath stress from a report from Axios that stated the Trump administration has been secretly working with Russia to draft a brand new plan to finish the warfare in Ukraine.  Power costs remained decrease after a blended EIA stock report confirmed that weekly crude provides fell greater than anticipated, whereas gasoline and distillate stockpiles rose greater than anticipated.  

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Oil costs are supported by information of lowered crude exports from Russia, after immediately’s knowledge from Vortexa confirmed Russia’s oil product shipments fell to 1.7 million bpd within the first 15 days of November, the bottom in additional than 3 years.  Ukraine has focused at the least 28 Russian refineries over the previous three months, exacerbating a gasoline crunch in Russia and limiting Russia’s crude export capabilities.  Ukraine has knocked out 13% to twenty% of Russia’s refining capability by the tip of October, curbing manufacturing by as a lot as 1.1 million bpd.  New US and EU sanctions on Russian oil firms, infrastructure, and tankers have additionally curbed Russian oil exports.

Oil costs have underlying help from continued geopolitical dangers associated to Russia, final Friday’s seizure by Iran of an oil tanker within the Gulf of Oman, and the US army buildup for a attainable assault on Venezuela, which is the world’s Twelfth-largest oil producer.

OPEC final Wednesday 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 stated it now sees a 500,000 bpd surplus in international oil markets in Q3, versus final 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.

OPEC+ at its November 2 assembly introduced that members will 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 document international oil surplus of 4.0 million bpd for 2026.  OPEC+ is making an attempt 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 October crude manufacturing rose by +50,000 bpd to 29.07 million bpd, the best in 2.5 years.

Vortexa reported Monday that crude oil saved on tankers which were stationary for at the least 7 days rose +1.1% w/w to 103.41 million bbls within the week ended November 14, the best stage since June 2024.

As we speak’s weekly EIA report was blended for crude oil and merchandise.  On the bearish facet, EIA gasoline provides rose +2.3 million bl, a bigger construct than expectations of +50,000 bbl.  Additionally, distillate stockpiles unexpectedly rose +171,000 bbl versus expectations of a -1.1 million bbl draw.  On the constructive facet, EIA crude inventories fell by -3.43 million bbl, a bigger draw than expectations of -2.0 million bbl.  Additionally, crude provides at Cushing, the supply level of WTI futures, fell by -698,000 bbl.

As we speak’s EIA report confirmed that (1) US crude oil inventories as of November 14 have been -5.0% under the seasonal 5-year common, (2) gasoline inventories have been -3.7% under the seasonal 5-year common, and (3) distillate inventories have been -6.9% under the 5-year seasonal common.  US crude oil manufacturing within the week ending November 14 fell -0.2% w/w to 13.834 million bpd, falling again from the document excessive of 13.862 million bpd from the prior week.

Baker Hughes reported final Friday that the variety of energetic US oil rigs within the week ending November 14 rose by +3 rigs to 417, modestly above the 4-year low of 410 rigs set on August 1.  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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