February WTI crude oil (CLG26) today is down -1.02 (-1.75%), and February RBOB gasoline (RBG26) is down -0.0306 (-1.74%).
Crude oil prices are sharply lower due to possible progress on a Ukraine-Russia peace deal. Ukrainian President Zelensky said he expects to meet with President Trump on Sunday in Florida. Mr. Zelensky said a 20-point peace plan is 90% ready, but it depends on the meeting with Mr. Trump and can't be finalized without input from Russia and Europe. Russia reportedly said that the 20-point peace plan fails to answer many questions.
Oil prices have support after the US on Thursday launched strikes on ISIS targets in Nigeria in a security and intelligence collaboration with the Nigerian government to combat rising terrorist attacks in the country. Nigeria is an OPEC member. Mr. Trump previously warned that the US would strike ISIS in Nigeria if the group did not stop killing Christians.
Oil prices have support from the US blockade of sanctioned oil tankers involved with Venezuelan oil shipments. The US Coast Guard forced the sanctioned oil tanker Bella 1 to turn away from Venezuela and head out into the Atlantic Ocean earlier this week, according to a Bloomberg report. US forces have been shadowing the vessel as part of President Trump’s blockade. US forces wanted to board Bella 1 near Barbados on Sunday, but the vessel instead moved back out into the Atlantic Ocean.
The US Energy Information Administration (EIA) announced that this week's EIA report will be released on Monday, December 29, due to the Christmas holiday.
Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -7% w/w to 107.15 million bbl in the week ended December 19.
Ukrainian drone and missile attacks have targeted at least 28 Russian refineries over the past three months, limiting Russia's crude oil export capabilities and reducing global oil supplies. Also, since the end of November, Ukraine has ramped up attacks on Russian tankers, with at least six tankers attacked by drones and missiles in the Baltic Sea. In addition, new US and EU sanctions on Russian oil companies, infrastructure, and tankers have curbed Russian oil exports.
Crude also garnered support after OPEC+ on November 30 said it would stick to its plan to pause production increases in Q1 of 2026. OPEC+ at its November 2 meeting announced that members would 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 November crude production fell by -10,000 bpd to 29.09 million bpd.
Last 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 the previous 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.
Last Wednesday's EIA report showed that (1) US crude oil inventories as of December 12 were -4.0% below the seasonal 5-year average, (2) gasoline inventories were -0.4% below the seasonal 5-year average, and (3) distillate inventories were -5.7% below the 5-year seasonal average. US crude oil production in the week ending December 12 fell -0.1% w/w to 13.843 million bpd, just below the record high of 13.862 million bpd from the week of November 7.
Baker Hughes reported Tuesday that the number of active US oil rigs in the week ended December 26 rose by +3 rigs to 409 rigs, recovering slightly from the 4.25-year low of 406 rigs posted in the week ended December 19. 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. For more information please view the Barchart Disclosure Policy here.
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