On Tuesday, November WTI crude oil (CLX25) fell by -0.79 (-1.33%), while November RBOB gasoline (RBX25) dropped by -0.0152 (-0.82%).
The prices for crude oil and gasoline declined on Tuesday, marking a 5.25-month low for crude. The worsening US-China trade relations have triggered a cautious sentiment in asset markets, contributing to the downward pressure on crude prices. This comes after China imposed sanctions on five US divisions of South Korean shipbuilder Hanwha Ocean Co., part of a growing series of retaliatory actions with both nations instituting special port fees against each other’s ships. Additionally, the latest forecast from the IEA predicting a record global oil surplus of 4.0 million bpd for 2026 has kept crude prices down. Nevertheless, some recovery was observed later in the day due to a weakening dollar.
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Crude prices have faced consistent pressure in recent days due to renewed trade conflicts with China. A prolonged trade dispute between the US and China could adversely affect global economic growth and energy demand, which would be bearish for crude prices.
Additionally, easing tensions in the Middle East have diminished some of the risk premium associated with crude prices, as a reduction in geopolitical fears lowers the chances of disruptions to crude supplies in the region following the recent agreement between Israel and Hamas.
Crude prices found some support after OPEC+ decided on October 5 to increase its crude production target by 137,000 bpd starting in November, which was lower than the market’s anticipated hike of 500,000 bpd. The group is working towards increasing output by an additional 1.66 million bpd to completely reverse the 2.2 million bpd cut made earlier in 2024. OPEC’s crude production in September rose by 400,000 bpd to 29.05 million bpd, the highest level recorded in 2.5 years.
A decrease in crude production from Russia has also been contributing to the support of oil prices. Over the past two months, Ukraine has targeted at least 28 Russian refineries, worsening the fuel crunch in Russia and restricting its crude export capabilities. Attacks by Ukrainian drones and missiles on Russian refineries have diminished Russia’s total refined-product flows to 1.94 million bpd in the first half of September, representing the lowest monthly average in over 3.25 years.
