January WTI crude oil (CLF26) on Friday closed up +0.51 (+0.91%), and January RBOB gasoline (RBF26) closed up +0.0069 (+0.41%).
Crude oil and gasoline prices settled higher on Friday. Crude prices are supported amid heightened geopolitical risks in Venezuela and Russia. Also, Friday’s stock rally boosts optimism about the economic outlook, which is supportive of energy demand. Crude prices raced to their highs Friday afternoon after the Baker Hughes weekly report showed active US oil rigs fell to a 4.25-year low, which portends lower crude production in the near term.
Gains in crude were limited on Friday after the dollar index (DXY00) climbed to a 1-week high. Also, a bearish global supply outlook continues to limit the upside in crude prices.
Weakness in the crude crack spread is bearish for crude prices. The crack spread fell to a 6-month low on Friday, discouraging refiners from purchasing crude oil and refining it into gasoline and distillates.
Escalation of global geopolitical tensions is supportive for crude prices. President Trump late Tuesday 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.
On Tuesday, crude oil and gasoline prices slumped to 4.75-year nearest-futures lows amid concerns about global energy demand and expectations for a worldwide oil glut.
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.
Ukrainian drone and missile attacks have targeted at least 28 Russian refineries over the past three months, exacerbating a fuel crunch in Russia, limiting Russia’s crude export capabilities, and lowering global oil supplies. Also, since the end of November, Ukraine has ramped up attacks on Russian tankers, with at least six tankers attacked by drones and missiles in the Baltic Sea. In addition, new US and EU sanctions on Russian oil companies, infrastructure, and tankers have curbed Russian oil exports.
