Crude oil and gasoline prices registered modest gains, primarily driven by easing US-China trade tensions, stronger-than-expected Eurozone GDP, and anticipated reductions in Russian crude supply due to sanctions and Ukrainian attacks. However, a rallying dollar, record US crude production, increasing OPEC+ output, and the IEA's forecast for a significant 2026 global oil surplus are creating a complex supply-demand dynamic that could limit further upside.
Crude oil and RBOB gasoline prices saw modest gains of +0.15% and +0.10% respectively on Thursday, primarily driven by an easing of US-China trade tensions and stronger global economic data, including Eurozone Q3 GDP growth of +0.2% q/q and an upward revision to Japan's 2025 GDP forecast. These developments suggest improved prospects for energy demand. Further support for oil prices stems from anticipated reductions in Russian crude supply. New US and EU sanctions targeting Rosneft, Lukoil, and numerous shadow-fleet vessels, coupled with Ukrainian drone attacks on Russian refineries, have curtailed Russia's seaborne fuel shipments to a 3.25-year low of 1.88 million bpd in early October. Additionally, US crude and gasoline inventories remain below their seasonal five-year averages, indicating tighter immediate supply in the US market. However, several factors are limiting significant upside. The dollar index rallied to a 2.75-month high, typically a headwind for dollar-denominated commodities. Furthermore, the IEA forecasts a substantial 4.0 million bpd global oil surplus for 2026, while OPEC+ is expected to continue increasing production, with a 137,000 bpd hike anticipated for December. Record US crude oil production, reaching 13.655 million bpd, and a 12% weekly increase in crude stored on stationary tankers also contribute to a bearish long-term supply outlook.
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