January WTI crude oil (CLF26) today is up +0.76 (+1.38%), and January RBOB gasoline (RBF26) is up +0.0166 (+0.99%).
Crude oil and gasoline prices are rising today amid heightened geopolitical risks in Venezuela and Russia. President Trump ordered a blockade of sanctioned tankers off Venezuela, and the US is preparing new sanctions on Russian energy exports if Russia rejects a peace deal to end the war in Ukraine. Crude prices fell back from their best level after weekly EIA crude inventories fell less than expected and gasoline supplies rose more than expected.
Crude prices jumped today amid an escalation in global geopolitical tensions. President Trump late last night ordered a “total and complete blockade of all sanctioned oil tankers” going into and leaving Venezuela. Also, the US is considering ratcheting up sanctions on Russian energy exports and targeting Russia’s shadow fleet of oil tankers and traders who facilitate its exports if President Putin rejects a proposed peace agreement with Ukraine.
Weakness in the crude crack spread is a negative factor for oil prices. The crack spread fell to a 6-month low today, discouraging refiners from purchasing crude oil and refining it into gasoline and distillates.
Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least 7 days rose +5.1 w/w to 120.23 million bbl in the week ended December 12.
Reduced crude exports from Russia are underpinning crude prices. On November 19, Vortexa data showed Russia’s oil product shipments fell to 1.7 million bpd in the first 15 days of November, the lowest in more than 3 years. Ukraine has targeted at least 28 Russian refineries over the past three months, exacerbating a fuel crunch in Russia and limiting Russia’s crude export capabilities. Ukrainian drone and missile attacks recently damaged a Russian Baltic Sea oil terminal, forcing it to close. The Caspian Pipeline Consortium, which carries 1.6 million bpd of Kazakhstan’s crude exports, was forced to close after a pipeline was damaged at one of its moorings. New US and EU sanctions on Russian oil companies, infrastructure, and tankers have also curbed Russian oil exports.
Crude also garnered support after OPEC+ on November 30 said it would stick to plans to pause production increases in Q1 of 2026. OPEC+ at its November 2 meeting announced that members will raise production by +137,000 bpd in December but will then pause the production hikes in Q1-2026 due to the emerging global oil surplus. The IEA in mid-October forecasted a record global oil surplus of 4.0 million bpd for 2026. OPEC+ is trying to restore all of the 2.2 million bpd production cut it made in early 2024, but still has another 1.2 million bpd of production left to restore. OPEC’s November crude production fell by -10,000 bpd to 29.09 million bpd.
Last month, OPEC revised its Q3 global oil market estimates from a deficit to a surplus, as US production exceeded expectations and OPEC also ramped up crude output. OPEC said it now sees a 500,000 bpd surplus in global oil markets in Q3, versus the previous month’s estimate for a -400,000 bpd deficit. Also, the EIA raised its 2025 US crude production estimate to 13.59 million bpd from 13.53 million bpd last month.
Today’s weekly EIA report was mainly bearish for crude oil and products. EIA crude inventories fell by -1.27 million bbl, a smaller draw than expectations of -2.05 million bbl. Also, EIA gasoline supplies rose +4.81 million bbl to a 4-month high, a larger build than expectations of +1.95 million bbl. On the positive side, crude stockpiles at Cushing, the delivery point for WTI futures, fell -742,000 bbl.
Today’s EIA report showed that (1) US crude oil inventories as of December 12 were -4.0% below the seasonal 5-year average, (2) gasoline inventories were -0.4% below the seasonal 5-year average, and (3) distillate inventories were -5.7% below the 5-year seasonal average. US crude oil production in the week ending December 12 fell -0.1% w/w to 13.843 million bpd, just below the record high of 13.862 million bpd from the week of November 7.
Baker Hughes reported last Friday that the number of active US oil rigs in 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 past 2.5 years, the number of US oil rigs has fallen sharply from the 5.5-year high of 627 rigs reported 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. This article was originally published on Barchart.com
