Oct WTI crude oil (CLV24) Thursday closed up +1.66 (+2.47%), and Oct RBOB gasoline (RBV24) closed up +2.98 (+1.57%).

Crude oil and gasoline prices rallied for a second day on Thursday.  Crude oil prices moved higher as tropical storm Francine disrupted US crude production in the Gulf of Mexico, reducing supplies.  Crude oil also saw support from a weaker dollar.

Crude found support Thursday after the US Bureau of Safety and Environmental Enforcement said that tropical storm Francine, now downgraded from a hurricane after it made landfall in Louisiana, has forced the shut-in of about 670,000 bpd of crude production in the Gulf of Mexico, or about 33% of total Gulf output.

Thursday's global news was mostly bearish for crude oil.  US weekly initial unemployment claims unexpectedly rose +2.000 to 230,000, showing a slightly weaker labor market than expectations of a decline to 226,000.  Also, the ECB cut its Eurozone 2024 GDP forecast to +0.8% from a previous forecast of +0.9%.  In addition, ECB President Lagarde said Eurozone growth risks are tilted to the downside.

Weakness in the crude crack spread is negative for crude prices.   Thursday's crack spread fell to a 3-1/2 year low, discouraging refiners from purchasing crude oil and refining it into gasoline and distillates.

A decline in crude oil held worldwide on tankers is bullish for prices.  Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -2.14% w/w to 60.25 million bbl in the week ended September 6.

Crude prices found support last Thursday after OPEC+ agreed to pause its scheduled crude production hike of 180,000 bpd in October and November due to recent weakness in crude prices and signs of fragile global energy demand.  

Crude oil prices were undercut last Tuesday when Libyan central bank governor Sadiq Al-Kibir said there are "strong" indications that political factions are nearing an agreement to overcome political differences and resume the country's crude oil production.  Last week, Libya's eastern government declared force majeure on all oil fields, terminals, and crude export facilities as it called for a halt to all crude production and exports due to political conflict over who controls the country's central bank and oil revenues.  The halt to Libya's crude exports threatened to remove more than 1 million bpd of crude from the global market.  

A supportive factor for crude is a decline in Russian crude exports.  Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -25,000 bpd to 3.1 million bpd in the week to September 1.  Meanwhile, increased Russian crude production is negative for oil prices after Russia's Energy Ministry reported on August 23 that Russia's July crude production was 9.045 million bpd, about 67,000 bpd above the output target it agreed to with OPEC+.

Wednesday's EIA report showed that (1) US crude oil inventories as of September 6 were -4.3% below the seasonal 5-year average, (2) gasoline inventories were -0.6% below the seasonal 5-year average, and (3) distillate inventories were -8.6% below the 5-year seasonal average.  US crude oil production in the week ending September 6 was unchanged w/w at 13.3 million bpd, just below the record high of 13.4 million bpd from the week of August 16.

Baker Hughes reported last Friday that active US oil rigs in the week ending September 6 were unchanged at 483 rigs, modestly above the 2-1/2 year low of 477 rigs posted in the week ending July 19.  The number of US oil rigs has fallen over the past year from the 4-year high of 627 rigs posted in December 2022.
 

• Gasoline versus Heating Oil- Where is VLO Heading?
• Crude Rallies as Tropical Storm Francine Disrupts US Gulf Crude Production
• Crude Finishes Higher on Smaller EIA Inventories and Hurricane Francine
• Crude Gains as Weekly EIA Inventories Climb Less Than Expected