October WTI crude oil (CLV25) today is up +1.26 (+1.97%), and October RBOB gasoline (RBV25) is up +0.0660 (+3.35%).
Crude oil and gasoline prices are sharply higher today and posted 1-month highs. Concerns over tighter global oil supplies are pushing crude prices higher today after Ukraine’s attacks on Russian refineries have cut Russia’s crude-processing runs to a 3-year low. Also, comments from US Treasury Secretary Bessent were bullish for crude when he said the US would look at additional sanctions on Russia for prolonging the war in Ukraine.
Limiting gains in crude today are a stronger dollar and the decline in the S&P 500 to a 1-week low, which reduces confidence in the economic outlook and energy demand. Also, the weakness in today’s US economic news on construction spending and manufacturing activity is negative for energy demand and crude prices.
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.
Today’s US economic news was mainly weaker-than-expected, a negative factor for energy demand and crude prices. The Aug ISM manufacturing index rose +0.7 to 48.7, weaker than expectations of 49.0. Also, Jul construction spending fell -0.1% m/m, the third consecutive month construction spending has declined.
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 today 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.
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