Dollar Strength and Stock Market Weakness Undercut Crude Oil Prices

January WTI crude oil (CLF26) on Friday closed down -0.16 (-0.28%), and January RBOB gasoline (RBF26) closed down -0.0077 (-0.44%).

Crude oil and gasoline costs moved decrease on Friday, with gasoline posting a 4.75-year nearest-futures low.  Friday’s greenback energy weighed on power costs.  Additionally, Friday’s inventory weak point has dampened optimism in regards to the financial outlook, a adverse issue for power demand and crude costs.  As well as, issues a couple of world oil glut proceed to strain crude costs.  

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Considerations a couple of world oil provide minimize are bearish for costs after world commodities dealer Trafigura stated Tuesday that the worldwide oil market is headed for a “tremendous glut” subsequent yr as a wave of recent provide runs up in opposition to sluggish power demand.

Weak spot within the crude crack unfold is a adverse issue for oil costs.  The crack unfold fell to a 2.25-month low on Friday, discouraging refiners from buying crude oil and refining it into gasoline and distillates.

Ramped-up geopolitical dangers in Venezuela, the world’s twelfth largest crude producer, are supportive for crude costs after US forces intercepted and seized a sanctioned oil tanker off the coast of Venezuela on Wednesday.  Reuters reported on Thursday that the US is making ready to intercept extra sanctioned tankers transporting Venezuelan oil.  The seizures could make it harder for Venezuela to export its oil, as different shippers at the moment are more likely to be extra reluctant to load cargoes from Venezuela.

Geopolitical dangers from the Russian-Ukrainian battle are supporting crude costs.  Final Tuesday, Interfax reported that Russian President Putin threatened to assault ships from nations serving to Ukraine if assaults on Russian vessels do not cease.   Lately, 5 Russian tankers have been attacked by drones within the Black Sea.

Decreased crude exports from Russia are underpinning crude costs.  On November 19, Vortexa knowledge 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 not less than 28 Russian refineries over the previous three months, exacerbating a gasoline crunch in Russia and limiting Russia’s crude export capabilities.    Ukrainian drone and missile assaults lately broken a Russian Baltic Sea oil terminal, forcing it to shut.  The Caspian Pipeline Consortium, which carries 1.6 million bpd of Kazakhstan’s crude exports, was pressured to shut after a pipeline was broken at one in every of its moorings.  New US and EU sanctions on Russian oil firms, infrastructure, and tankers have additionally curbed Russian oil exports.

Crude additionally garnered assist after OPEC+ on November 30 stated it might follow plans to pause manufacturing will increase in Q1 of 2026.  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 world oil surplus.  The IEA in mid-October forecasted a document world oil surplus of 4.0 million bpd for 2026.  OPEC+ is making an attempt to revive the entire 2.2 million bpd manufacturing minimize 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 world 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 world 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.

Vortexa reported Monday that crude oil saved on tankers which were stationary for not less than 7 days fell -7.9 w/w to 121.23 million bbls within the week ended December 5.

Wednesday’s EIA report confirmed that (1) US crude oil inventories as of December 5 had been -4.3% beneath the seasonal 5-year common, (2) gasoline inventories had been -1.8% beneath the seasonal 5-year common, and (3) distillate inventories had been -7.7% beneath the 5-year seasonal common.  US crude oil manufacturing within the week ending December 5 rose +0.3% w/w to 13.853 million bpd, just under the document excessive of 13.862 million bpd from the week of November 7.

Baker Hughes reported Friday that the variety of energetic US oil rigs within the week ending December 12 rose by +1 to 414 rigs, modestly above the 4-year low of 407 rigs reported on November 28.  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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