October WTI crude oil (CLV25) on Thursday closed down -0.48 (-0.75%), and October RBOB gasoline (RBV25) closed down -0.0173 (-0.85%).
Crude oil and gasoline prices settled lower on Thursday as the dollar rallied. Also, the outlook for a global oil supply glut is undercutting crude prices. Losses in crude were limited Thursday as Ukraine ramped up its attacks against Russian refineries, which threaten to tighten global oil supplies. Also, better-than-expected US economic news on Thursday is supportive of energy demand and crude prices. In addition, Thursday’s rally in the S&P 500 to a new record high shows confidence in the economic outlook that is bullish for energy demand.
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Concerns about a global oil glut are bearish for crude prices after the International Energy Agency (IEA) last Thursday boosted its 2026 global crude surplus estimate to 3.33 million bpd, +360,000 bpd higher than anticipated in August, citing plans by OPEC+ to revive its crude production.
Better-than-expected US economic news on Thursday was supportive of energy demand and crude prices. Weekly initial unemployment claims fell by -33,000 to 231,000, showing a stronger labor market than expectations of 240,000. Also, the Sep Philadelphia Fed business outlook survey rose +23.5 to an 8-month high of 23.2, stronger than expectations of 1.7.
Ukraine has stepped up its attacks on Russian refineries and oil infrastructure, which is bullish for crude prices as it curbs Russian crude exports and tightens global oil supplies. Ukraine attacked Russia’s Salavat and Volograd oil refineries on Thursday, halting around 300,000 bpd of refining capacity. On Tuesday, Russia’s Transneft Pipeline, which handles more than 80% of the country’s oil, restricted the ability to store crude. Also, the Kirishi refinery, one of Russia’s biggest refineries that has an annual processing capacity of over 20 million tons, halted crude processing after damage caused by a Ukrainian drone attack on Sunday. In addition, Ukrainian drone attacks have damaged Russian oil infrastructure and crude-exporting hubs along Russia’s Baltic Coast. Ukrainian drone and missile attacks on Russian refineries have curbed Russia’s crude-processing runs to 4.98 million bpd in the first three days of September, the lowest monthly average in over 3.25 years.
Crude prices have support on concerns that the ongoing war in Ukraine could lead to additional sanctions on Russian energy exports, reducing global oil supplies. President Trump said last Friday that his patience with Russian President Putin was “running out fast” for continuing the war in Ukraine, and he threatened new economic sanctions against Russia. The US proposed that the Group of Seven allies impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince Russia to end the war in Ukraine.
A decrease in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -7.2% w/w to 67.96 million bbl in the week ended September 12.
Crude prices also have support after OPEC+ agreed on September 7 to raise its crude production by 137,000 bpd, starting in October. This is less than the 547,000 bpd increase the group decided to boost output in September and August. OPEC+ also said restarting the remainder of the 1.66 million bpd crude production it had idled will be contingent on “evolving market conditions.” OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production by September 2026. OPEC Aug crude production rose by +400,000 bpd to 28.55 million bpd, the highest in over two years.
Wednesday’s EIA report showed that (1) US crude oil inventories as of September 12 were -4.7% below the seasonal 5-year average, (2) gasoline inventories were -1.6% below the seasonal 5-year average, and (3) distillate inventories were -7.4% below the 5-year seasonal average. US crude oil production in the week ending September 12 fell by -0.1% w/w to 13.482 million bpd, modestly below the record high of 13.631 million bpd posted in the week of 12/6/2024.
Baker Hughes reported last Friday that the number of active US oil rigs in the week ending September 12 rose by +2 to 416 rigs, just above the 4-year low of 410 rigs from August 1. 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
