December WTI crude oil (CLZ25) today is up +1.64 (+2.79%), and December RBOB gasoline (RBZ25) closed up +0.0526 (+2.68%).

Crude oil and gasoline prices are sharply higher today, recovering some of Wednesday’s sharp sell-off.  Concerns about global oil supplies are bullish for crude prices today after Ukraine launched drone and missile attacks on Russia’s key oil export port of Novorossiysk and attacked the Rosneft Saratov refinery in Russia’s Volga region, which processes about 140,000 bpd.

Also, today’s Iranian seizure of an oil tanker in the Gulf of Oman has heightened geopolitical risks in the Middle East and pushed crude prices higher.

Reduced crude exports from Russia are supportive of oil prices.  Ukraine has targeted at least 28 Russian refineries over the past three months, exacerbating a fuel crunch in Russia and limiting Russia’s crude export capabilities.  Ukrainian drone and missile attacks on Russian refineries and oil export terminals curbed Russia’s total seaborne fuel shipments to 3.45 million bpd in the four weeks to November 9, down by -130,000 bbl from the prior week and the lowest in two months.  Ukraine has knocked out 13% to 20% of Russia’s refining capacity by the end of October, curbing production by as much as 1.1 million bpd.  New US and EU sanctions on Russian oil companies, infrastructure, and tankers have also curbed Russian oil exports.

On Wednesday, crude prices tumbled to a 3-week low after OPEC revised its Q3 global oil market estimates from a deficit to a surplus, as US production exceeded expectations and OPEC also ramped up crude output.  OPEC said it now sees a 500,000 bpd surplus in global oil markets in Q3, versus last month’s estimate for a -400,000 bpd deficit.  Also, the EIA raised its 2025 US crude production estimate to 13.59 million bpd from 13.53 million bpd last month.

As a bearish factor, Saudi Arabia last Thursday lowered the price of its main crude grade to Asia for delivery next month to the lowest level in 11 months.

Strength in crude demand from China, the world’s second-largest oil consumer, is supportive of prices, after a report last Friday showed that China’s Jan-Oct crude imports rose +3.1% y/y to 471 MMT.

Oil prices have received support on recent reports that the US military may be on the verge of launching military strikes on Venezuela, which is the world’s 12th largest oil producer.

OPEC+ at its November 2 meeting announced that members will raise production by +137,000 bpd in December but will then pause the production hikes in Q1-2026 due to the emerging global oil surplus.  The IEA in mid-October forecasted a record global oil surplus of 4.0 million bpd for 2026.  OPEC+ is trying to restore all of the 2.2 million bpd production cut it made in early 2024, but still has another 1.2 million bpd of production left to restore.  OPEC’s October crude production rose by +50,000 bpd to 29.07 million bpd, the highest in 2.5 years.

Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least 7 days rose +11% w/w to 95.18 million bbls in the week ended November 7.

Thursday’s EIA report showed that (1) US crude oil inventories as of November 7 were -4.1% below the seasonal 5-year average, (2) gasoline inventories were -4.0% below the seasonal 5-year average, and (3) distillate inventories were -7.9% below the 5-year seasonal average.  US crude oil production in the week ending November 7 rose +1.5% w/w to a record high of 13.862 million bpd.

Baker Hughes reported last Friday that the number of active US oil rigs in the week ending November 7 remained unchanged at 414, modestly above the 4-year low of 410 rigs set on August 1.  Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.5-year high of 627 rigs reported in December 2022.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com