Crude Prices Weighed Down by Economic Concerns | U.S. Markets

April WTI crude oil (CLJ25) Wednesday closed down -0.31 (-0.45%), and April RBOB gasoline (RBJ25) closed down -0.0232 (-1.05%).

Crude oil costs Wednesday settled reasonably decrease, with crude falling to a 2-1/4 month low and gasoline sliding to a 2-month low.  Financial considerations weighed on crude costs Wednesday after US Jan new home gross sales fell more than anticipated.  Crude costs had been already on the defensive from Tuesday when the US Feb shopper confidence index dropped to an 8-month low.  Greenback energy Wednesday was additionally bearish for power costs.   Nevertheless, crude recovered from its worst ranges Wednesday after weekly EIA crude inventories unexpectedly declined.  

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Wednesday’s international financial news was weaker than anticipated and destructive for power demand and crude costs.  US Jan new home gross sales fell -10.5% m/m to 657,000, weaker than expectations of 680,000.  Additionally, the German Mar GfK shopper confidence index unexpectedly fell -2.1 to an 11-month low of -24.7, weaker than expectations of an increase to -21.6.

Oil costs had been additionally undercut Wednesday after Iraq’s oil minister stated his nation had reached an settlement with Kurdistan to renew exporting crude through an oil pipeline by Turkey.  Nevertheless, the ministry stated Iraq would stay within its OPEC manufacturing cap.  These pipeline shipments of about 185,000 bpd have been shut down for the previous two years because of a cost dispute.

Oil costs proceed to be undercut by the thaw in US-Russian relations and doable peace talks on the Russia-Ukraine struggle, which might finally result in decreased sanctions on Russia and the total resumption of Russian oil exports.

Crude discovered assist final week on a drone assault on a Russian pumping station that might scale back Kazakhstan crude oil exports by 30%.   Crude oil costs additionally discovered assist final Wednesday when Bloomberg reported that OPEC+ is contemplating a delay of month-to-month provide will increase which can be at the moment because of begin in April.  

In a supportive issue for crude oil costs, the US on January 10 imposed new sanctions on Russia’s oil industry that might curb international oil provides.  The measures focused Gazprom Neft and Surgutneftgas, which exported about 970,000 bpd of Russian crude within the first 10 months of 2024, accounting for about 30% of its tanker circulate, in response to Bloomberg knowledge.  The US additionally focused insurers and merchants linked to a whole lot of tanker cargoes.  Weekly vessel-tracking knowledge from Bloomberg confirmed Russian crude exports fell by -130,000 bpd to three.09 million bpd within the week to February 2.  Russian oil manufacturing fell to eight.062 million bpd in January, which was -16,000 bpd beneath its OPEC+ quota.

Crude oil demand in China has weakened and is a bearish issue for oil costs.  In keeping with Chinese language customs knowledge, China’s 2024 crude imports fell -1.9% y/y to 553 MMT.  China is the world’s greatest crude importer.

A decline in crude oil held worldwide on tankers is bullish for oil costs.  Vortexa reported Monday that crude oil saved on tankers which were stationary for not less than seven days fell by -12% w/w to 65.65 million bbl within the week ended February 21.

OPEC+ stated at its month-to-month assembly on February 3 that it will not change its oil-production plans within the first quarter however would step by step restore crude output in month-to-month phases starting in April.  OPEC+ final month pushed back a deliberate hike of its crude manufacturing by +180,000 bpd from January to April and stated it will unwind its crude output cuts at a slower tempo than deliberate.  OPEC+ had beforehand deliberate to revive 2.2 million bpd of output in month-to-month installments between January and late 2025.  Nevertheless, the date for the finished manufacturing increase was pushed back till September 2026.  OPEC Jan crude manufacturing fell -700,000 bpd to 27.03 million bpd.

Wednesday’s weekly EIA report was blended for crude and merchandise.  On the constructive aspect,  EIA crude inventories unexpectedly fell -2.3 million bbl versus expectations of a +2.4 million bbl construct.  Conversely, EIA gasoline provides unexpectedly rose +369,000 bbl versus expectations of a -1.4 million bbl draw.  Additionally, EIA distillate stockpiles unexpectedly rose +3.91 million bbl versus expectations of a -2.76 million bbl draw.  As well as, crude inventories at Cushing, the supply level of WTI futures, rose +1.28 million bbl.

Wednesday’s EIA report confirmed that (1) US crude oil inventories as of February 21 had been -4.3% beneath the seasonal 5-year average, (2) gasoline inventories had been -0.1% beneath the seasonal 5-year average, and (3) distillate inventories had been -7.8% beneath the 5-year seasonal average.  US crude oil manufacturing within the week ending February 21 was unchanged w/w at 13.502 million bpd, modestly beneath the file high of 13.631 million bpd from the week of December 6.

Baker Hughes reported final Friday that energetic US oil rigs within the week ending February 21 rose by +7 to 488 rigs, reasonably above the 3-year low of 472 rigs posted January 24.  The quantity of US oil rigs has fallen over the previous two years from the 4-1/2 yr high of 627 rigs posted in December 2022. 

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