October WTI crude oil (CLV25) today is down -1.75 (-2.67%), and October RBOB gasoline (RBV25) is down -0.0301 (-1.47%).
Crude oil and gasoline prices are falling sharply today on concerns of a global oil supply glut following a report from Reuters that OPEC+ is considering an increase in its crude production levels. Today’s weakness in US economic news also weighed on energy demand prospects and crude prices. Today’s weaker dollar is a supportive factor for energy prices.
Today’s US economic news was weaker-than-expected, a negative factor for energy demand and crude prices. The Jul JOLTS job openings fell -176,000 to a 10-month low of 7.181 million, showing a weaker labor market than expectations of 7.380 million. Also, Jul factory orders fell -1.3% m/m, the second straight month orders have declined.
Reduced Russian crude output is tightening global oil supplies and is supportive of prices. Ukrainian drone and missile attacks on Russian refineries have curbed Russia’s crude-processing runs to 5.09 million bpd in the first 27 days of August, the lowest monthly average in over 3.25 years.
Crude prices have support on concerns that the ongoing war in Ukraine could lead to additional sanctions on Russian energy exports, reducing global oil supplies. US Treasury Secretary Bessent said Tuesday that the US “will be examining sanctions on Russia very closely this week” due to the ongoing war in Ukraine. President Trump has threatened “very big consequences” if Russia doesn’t come to the negotiating table. Last Friday, German Chancellor Merz and French President Macron called for secondary sanctions on Russia for its war in Ukraine. They said they will push for measures targeting “companies from third countries that support Russia’s war.”
A decrease in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -18% w/w to 72.67 million bbl in the week ended August 29.
Concerns about higher OPEC production are negative for crude prices after OPEC+ on August 2 endorsed an additional 547,000 bpd increase in its crude production for September 1. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production by September 2026. OPEC+ has 1.66 million bpd of supplies that are currently due to remain offline until late 2026. OPEC+ will meet again on September 7 to discuss crude production levels. OPEC Aug crude production rose by +400,000 bpd to 28.55 million bpd, the highest in over two years.
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