January WTI crude oil (CLF26) today is up +0.26 (+0.45%), and January RBOB gasoline (RBF26) is up +0.0002 (+0.01%).

Crude oil and gasoline prices recovered from early losses today and moved higher as stocks rallied sharply, signaling bullish confidence in the economic outlook and energy demand.  Gains in crude are limited by improving prospects for a peace deal to end the war in Ukraine, which could lead to the end of sanctions on Russian energy and boost global crude supplies.  

Crude prices are seeing pressure in hopes that an end to the war in Ukraine is near.  Last Thursday, President Trump presented a 28-point peace plan, drawn up in consultation with Russia, that Ukrainian President Zelenskiy said he's willing to work on.  An end to the war in Ukraine could lead to the removal of sanctions on Russian energy exports that would boost global oil supplies.    

Vortexa reported today that crude oil stored on tankers that have been stationary for at least 7 days rose +9.7% w/w to 114.31 million bbls in the week ended November 21, the highest level in 2.25 years.

Earlier this 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 last 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.

Oil prices are supported by news of reduced crude exports from Russia, after last Wednesday's data from Vortexa 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.  Ukraine has 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.

Oil prices have underlying support from continued geopolitical risks related to Russia and the US military buildup for a possible attack 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.

Last Wednesday's EIA report showed that (1) US crude oil inventories as of November 14 were -5.0% below the seasonal 5-year average, (2) gasoline inventories were -3.7% below the seasonal 5-year average, and (3) distillate inventories were -6.9% below the 5-year seasonal average.  US crude oil production in the week ending November 14 fell -0.2% w/w to 13.834 million bpd, falling back from the record high of 13.862 million bpd from the prior week.

Baker Hughes reported last Friday that the number of active US oil rigs in the week ending November 21 rose by +2 rigs to 419, 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.
 

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