April WTI crude oil (CLJ23) on Tuesday closed down -0.19 (-0.25%), and Mar RBOB gasoline (RBH23) closed up +0.11 (+0.04%).
Crude oil and gasoline prices Tuesday settled mixed. A stronger dollar Tuesday weighed on energy prices. Also, Tuesday's decline in the S&P 500 to a 3-1/2 week low undercuts optimism in the economic outlook that is bearish for energy demand. In addition, signs of an uneven recovery in China are bearish for energy demand.
Recent Chinese news shows an uneven economic recovery that is bearish for energy demand. In January, China's car production and sales fell more than -30% from a year ago. Also, China's housing market remains in a slump as Jan home sales for the top hundred Chinese developers fell -33% y/y. On the positive side, increasing Chinese air travel supports fuel demand and crude prices. The Civil Aviation Administration of China (CACC) reported 55.2 million air passenger trips in China from January 7 to February 15, up +39% from the same time last year and at 76% of 2019's level.
In a bullish factor, Vortexa on Monday reported that the amount of crude stored on tankers that have been stationary for at least a week fell -8.4% w/w to 71.27 million bbl in the week ended February 17.
On February 1, the OPEC+ Joint Ministerial Monitoring Committee recommended keeping crude production levels steady as the oil market awaits clarity on demand in China and crude supplies from Russia. Goldman Sachs predicts that OPEC+ will only start to reverse its supply cuts, currently at about 2 million bpd, in the second half of this year when accelerating demand will tighten the market. OPEC crude production in January fell by -60,000 bpd to 29.12 million bpd. Saudi Arabian Energy Minister Abdulaziz bin Salman last Thursday said the OPEC+ alliance plans to maintain its oil deal set in October for the rest of this year. Also, UAE Energy Minister Suhail Al Mazrouei said last Monday that despite Russia's plan to cut crude output, global oil markets remain balanced, and OPEC+ producers don't need to intervene.
Last Wednesday's EIA report showed that (1) U.S. crude oil inventories as of February 10 were +7.3% above the seasonal 5-year average, (2) gasoline inventories were -4.9% below the seasonal 5-year average, and (3) distillate inventories were -15.3% below the 5-year seasonal average. U.S. crude oil production in the week ended February 10 was unchanged w/w at a 2-3/4 year high of 12.3 million bpd, which is only 0.8 million bpd (-6.1%) below the Feb-2020 record-high of 13.1 million bpd.
Baker Hughes reported last Friday that active U.S. oil rigs in the week ended February 17 fell by -2 rigs to 607 rigs, moderately below the 2-1/2 year high of 627 rigs posted on December 2. U.S. active oil rigs have more than tripled from the 17-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity.
More Crude Oil News from Barchart
- Crude Prices Slip on Uneven Recovery in China
- Crude Prices Retreat on Dollar Strength and Global Economic Concerns
- Crude Prices Tumble on Dollar Strength and Economic Concerns
- Crude Prices Fall on Higher U.S. Inventories
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. For more information please view the Barchart Disclosure Policy here.
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