December WTI crude oil (CLZ25) today is up +0.94 (+1.56%), and December RBOB gasoline (RBZ25) is up +0.0412 (+2.09%).

Crude oil and gasoline prices are sharply higher today, with crude posting a 1-week high and gasoline posting a 6-week high.  Today's decline in the dollar index (DXY00) to a 1.5-week low is bullish for energy prices.   Crude also has support amid expectations that the US government will reopen later this week, which would support economic growth and energy demand.

On Monday, the Senate voted 60-40 to pass a temporary continuing resolution (CR) to fund the government and the House will vote on the measure on Wednesday, when it is expected to pass.  If approved, the bill goes to President Trump, who said he will sign it into law.  Expectations for the government shutdown to end has sparked a risk-on mood in asset markets.

Strength in crude demand from China, the world's second-largest crude consumer, is supportive of prices, after a report last Friday showed that China's Jan-Oct crude imports rose +3.1% y/y to 471 MMT.  

In a bearish factor, Saudi Arabia last Thursday lowered the price of its main crude grade to Asia for delivery next month to the lowest level in 11 months.  

Oil prices have support on recent reports that the US military may be on the verge of launching military strikes on Venezuela, which is the world's 12th largest oil producer.

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 October crude production rose by +50,000 bpd to 29.07 million bpd, the highest in 2.5 years.

Reduced crude exports from Russia are supportive of oil prices.  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 on Russian refineries and oil export terminals curbed Russia's total seaborne fuel shipments to 1.88 million bpd in the first ten days of October, the lowest average in over 3.25 years, and have knocked out 13% to 20% of Russia's refining capacity by the end of October, curbing production by as much as 1.1 million bpd.  New US and EU sanctions on Russian oil companies, infrastructure, and tankers have also curbed Russian oil exports.

Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least 7 days rose +11% w/w to 95.18 million bbls in the week ended November 7.

Last Wednesday's EIA report showed that (1) US crude oil inventories as of October 31 were -5.3% below the seasonal 5-year average, (2) gasoline inventories were -4.3% below the seasonal 5-year average, and (3) distillate inventories were -8.8% below the 5-year seasonal average.  US crude oil production in the week ending October 31 rose +0.1% w/w to a record high of 13.651 million bpd.

Baker Hughes reported last Friday that the number of active US oil rigs in the week ending November 7 remained unchanged at 414, modestly above the 4-year low of 410 rigs set on 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.