Crude oil prices rise after OPEC+ approval of a modest increase in production

The West Texas Intermediate Crude increased for the month of November (ClX25) today +0.80 ( +1.31%), and RBOB gasoline increased for the month of November (RBX25) +0.0400 ( +2.15%).

Crude oil and gasoline prices rose today after OPEC + agreed to increase less than expected in their crude production levels. The decrease in Russian crude oil supports oil prices after Reuters stated that the Russian Kerishi oil refinery stopped most of its production after a drone attack launched by Ukraine. Crude oil gains were limited after the dollar index (DXY00) rose to its highest level in one week today.

Crude oil prices got support today after OPEC + agreed to increase +137 thousand barrels per day in the goal of crude production starting next month, which is less than the market expectations of up to 500 thousand barrels per day in production.

Reduced crude production in Russia supports oil prices after Reuters stated that the Kerishi refinery of Russian oil refining, which has a capacity of 160,000 barrels per day, stopped most of its production in the wake of an Ukrainian drone attack and a fire in the refinery on Saturday. Ukraine has targeted at least 15 Russian refineries in the past two months, which has exacerbated the fuel crisis in Russia and reducing Russia’s capabilities to export crude oil. Ukraine attacks with drones and missiles on Russian refineries reduced the total refined product flows in Russia to 1.94 million barrels per day in the first fifteen days of September, which is the lowest monthly average in more than 3.25 years.

The decline in crude oil around the world on the carriers is up to oil prices. Vortexa reported today that crude oil stored on tankers that have been fixed for at least seven days decreased by -7 % weight to 82.81 million barrels per week ending October 3.

Last Thursday, crude oil decreased to its lowest level in 4.25 months in futures, and gasoline decreased to the lowest level in 4.5 years due to greater production forecast for OPEC +. OPEC + has increased production to reflect the continuous production reduction for two years and restore a total of 2.2 million barrels per day of production. OPEC production of crude in September increased 400 thousand barrels per day to 29.05 million barrels per day, the highest level in two and a half years.

Crude oil prices are also under pressure, as the International Energy Agency expects that the global oil market is heading towards achieving a record surplus next year of 3.33 million barrels per day, or about 360 thousand barrels per day than it expected a month ago, with OPEC + continuing to revive production.

It is also expected that the expectations of high crude oil production in Iraq will strengthen global oil supplies, which is negative for crude oil prices. Iraq recently announced that it had reached an agreement with the Kurdistan Regional Government to resume the export of oil from the Kurdish region through a pipeline to Türkiye, which has been suspended for the past two years due to a payment dispute. Iraqi Foreign Minister Hussein said that the resumption of crude exports may add 500 thousand barrels per day from the new oil supplies to the global markets.

Crude oil prices are supported by fears that the ongoing war in Ukraine will impose additional sanctions on Russian energy exports, which reduces global oil supplies. President Trump said he believed that NATO countries should drop the Russian aircraft that violated their air field, and reaffirmed Europe’s need to reduce its energy purchases from Russia. The United States has suggested that the Group of Seven allies impose customs tariffs of 100% on China and India for their purchases of Russian oil in an attempt to persuade Russia to end the war in Ukraine.

The environmental impact assessment report issued last Wednesday showed that (1) American crude oil stocks as of September 26 were 4.1 % less than the seasonal average for five years, (2) gasoline stocks were less than -0.2 % than the seasonal average for five years, and (3) the distillation products were less than -5.5 % than the seasonal average for five years. US crude oil production in the week ending September 26 has not changed at 13.505 million barrels per day, and it is just less than the standard level of 13.631 million barrels per day in the week 12/6/2024.

Baker Hughes said last Friday that the number of American oil platforms active in the week ending October 3 decreased by -2 to 422 platforms, which slightly exceeds its lowest level in 4 years at 410 platforms since August 1.

On the date of publication, Rich Asplund did not have positions (both directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for media purposes only. This article was originally published on Parchart.com