April WTI crude oil (CLJ23) on Friday closed up +1.52 (+1.94%), and Apr RBOB gasoline (RBJ23) closed up +5.01 (+1.86%). Â
Crude oil and gasoline prices Friday rallied to 2-week highs and closed moderately higher. Â Â A weaker dollar (DXY00) Friday was supportive of energy prices. Â Also, signs of economic strength in China, the world's second-largest crude consumer, is bullish for oil prices after a gauge of China's services sector in February expanded at the fastest pace in 6 months. Â Crude prices extended their gains Friday afternoon after a weekly report from Baker Hughes showed the amount of active U.S. oil rigs this week fell to a 5-3/4 month low, which signals a reduction in future U.S. crude output. Â
Early Friday, crude prices initially fell after the Wall Street Journal reported that the United Arab Emirates (UAE) was discussing quitting OPEC. Â However, crude prices reversed and moved higher after the UAE said it has no plans to leave OPEC.
China's economic news Friday was better than expected and bullish for energy demand and crude prices. Â China's Feb Caixin services PMI rose +2.1 to 55.0, stronger than expectations of 54.5 and the fastest pace of expansion in 6 months.
Indian buyers of Russian oil are struggling to obtain the crude as onerous demands from financiers wary of breaching Western sanctions are making it hard for Indian buyers to secure financing for their purchases of Russian crude. Â The inability to fund the purchases of Russian crude may force Indian buyers elsewhere to obtain crude supplies, which is bullish for oil prices. Â
Rising crude demand in India, the world's third-largest crude consumer, is bullish for prices. Â India's oil ministry predicts India's oil-products consumption will climb by +4.9% y/y to a record 233.8 MT in the 12 months from April. Â
In a bullish factor, Vortexa last 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. Â 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. Â OPEC crude production in February rose by +120,000 bpd to 29.24 million bpd.
Wednesday's EIA report showed that (1) U.S. crude oil inventories as of February 24 were +9.7% above the seasonal 5-year average, (2) gasoline inventories were -5.6% below the seasonal 5-year average, and (3) distillate inventories were -11.1% below the 5-year seasonal average. Â U.S. crude oil production in the week ended February 24 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 Friday that active U.S. oil rigs in the week ended March 3 fell by -8 rigs to a 5-3/4 month low of 592 rigs, moderately below the 2-1/2 year high of 627 rigs posted on December 2. Â 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 Energy News from Barchart
- Nat-Gas Prices Surge on Cold Temps and Record U.S. LNG Exports
- Crude Climbs on a Weaker Dollar and Chinese Economic Strength
- Crude Finishes Moderately Higher on Expectations of Stronger Chinese Energy Demand
- Nat-Gas Prices Moderately Lower on Expanding U.S. Nat-Gas Stockpiles
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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