July 24, 2023 [barchart] – August WTI crude oil (CLQ23) on Thursday closed up +0.28 (+0.37%), and Aug RBOB gasoline (RBQ23) closed up +2.27 (+0.83%).

Crude oil and gasoline prices on Thursday posted moderate gains, with gasoline climbing to a 3-month nearest-futures high. Crude prices Thursday moved higher on the outlook for tighter crude supplies after Russia’s crude shipments fell to a 6-month low. Crude also found support in hopes that China will implement policies that revive economic growth and energy demand. Limiting gains in energy prices was Thursday’s rally in the dollar index (DXY00) to a 1-week high.

A bullish factor for crude is a decline in Russian crude shipments. Vessel-tracking data monitored by Bloomberg and corroborated by other sources showed Russian crude oil shipments in the four weeks to July 16 dropped to a 6-month low of 3.1 million bpd.

Crude prices have support on signs China will implement policies to revive economic growth. Late Wednesday, the Communist Party and the government issued a rare joint statement that included 31 measures to improve business conditions, including pledges to treat private companies the same as state-owned enterprises and consult more with entrepreneurs before drafting policies.

Crude prices were under pressure Monday on news that Libya is restarting crude production at its 250,000 bpd Sharara oil field, its second-largest after protesters left the facility following their forced shutdown last week. Crude production at the 70,000 bpd El Feel oil field has also resumed.

In a supportive factor for oil prices, Saudi Arabia earlier this month said it would extend its unilateral 1 million bpd production cut through August, keeping Saudi Arabia’s crude output at about 9 million bpd, the lowest level in several years. Also, Russia voluntarily pledged to cut 500,000 bpd of crude output in August. However, Russia has yet to implement its pledged crude production cuts fully. Russian crude production cuts totaled 350,000 bpd in June, below the 500,000 bpd of cuts it said it would implement in March. Meanwhile, OPEC crude production in June rose +80,000 bpd to 28.57 million bpd.

A decline in crude in floating storage is bullish for prices. Monday’s weekly data from Vortexa shows the amount of crude oil held worldwide on tankers that have been stationary for at least a week fell -21% w/w to 94.60 million bbl as of July 14.

An improvement in Chinese crude demand is bullish for prices after government trade data showed China’s June crude imports rose +4.6% m/m to 12.72 million bpd, the most in three years.

Wednesday’s EIA report showed that (1) U.S. crude oil inventories as of July 14 were +1.1% above the seasonal 5-year average, (2) gasoline inventories were -7.6% below the seasonal 5-year average, and (3) distillate inventories were -14.3% below the 5-year seasonal average. U.S. crude oil production in the week ended July 14 was unchanged w/w at 12.3 million bpd. U.S. crude oil production is well below the Feb-2020 record-high of 13.1 million bpd.

Baker Hughes reported last Friday that active U.S. oil rigs in the week ended July 14 fell by -3 rigs to a 15-month low of 537 rigs. That is well below the 3-1/4 year high of 627 rigs posted on December 2, 2022. U.S. active oil rigs have more than tripled from the 18-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity.

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