On Tuesday, November WTI crude oil (CLX25) experienced a slight uptick, closing at +0.04 (+0.06%), while November RBOB gasoline (RBX25) saw a minor decline, finishing down -0.0077 (-0.40%).
The trading session on Tuesday concluded with mixed results for crude oil and gasoline prices. Crude oil benefited from residual support stemming from Sunday’s announcement that OPEC+ would implement a smaller-than-expected increase in its production targets. However, gains were curtailed by a robust dollar, as the dollar index (DXY00) hit a 1.5-week peak. Moreover, Saudi Arabia’s surprising decision to maintain its crude prices instead of raising them indicates a softening demand for energy, which is a negative sign for oil pricing.
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Crude Prices Move Higher on a Smaller-Than-Expected OPEC+ Production Hike
Crude prices received a boost following OPEC+’s agreement to a 137,000 bpd increase in its target production, effective next month, which fell short of market anticipations of a 500,000 bpd rise. Currently, OPEC+ is in the process of unwinding a previous supply cut of 1.66 million bpd and aims to restore a total of 2.2 million bpd of production.
Negative sentiment around crude was also influenced by Saudi Arabia’s state oil corporation, Aramco, which opted to keep the price of its primary oil grade for Asian clients stable for next month’s deliveries, rather than implementing an expected 30-cent increase. This lack of adjustment suggests a deterioration in energy demand, which is bearish for crude oil prices.
Furthermore, oil prices may find additional support from reduced output in Russia, as reports indicate that the Kirishi oil refinery, capable of processing 160,000 bpd, has largely ceased its operations following a Ukrainian drone strike and subsequent fire last Saturday. Over the past two months, Ukrainian forces have targeted at least 15 Russian refineries, resulting in a significant fuel shortage in Russia and constraining its crude export abilities. Ukrainian strikes have led to a decrease in Russian refined-product flows to 1.94 million bpd in the first two weeks of September, marking the lowest monthly average in more than three years.
A decline in global crude stocks held on tankers is also seen as a bullish indication for oil prices. According to Vortexa, the amount of crude oil stored on tankers that have not moved for at least seven days has dropped by 7% week over week to 82.81 million barrels as of the week ending October 3.
