September WTI crude oil (CLU25) on Wednesday closed up +0.86 (+1.38%), and September RBOB gasoline (RBU25) closed up +0.0393 (+1.88%).
Crude oil and gasoline prices rallied on Wednesday, with gasoline posting a 2-week high. Dollar weakness on Wednesday was supportive for energy prices. Crude and gasoline also found support after Wednesday's weekly EIA crude and gasoline inventories fell more than expected. Gains in crude are limited by signs of progress in Ukraine peace talks, which could pave the way for fewer restrictions on Russian crude exports.
Signs of progress in peace talks over the Ukraine war are bearish for crude prices. President Trump is pushing for a summit between Presidents Putin and Zelenskiy soon. Any resolution to the Russian-Ukrainian war could be bearish for crude prices, as an end to the war could mean allowing Russian crude to trade freely and could lead to an end to sanctions on Russian energy exports.
Concern about higher OPEC production is weighing on crude prices after OPEC+ on August 2 endorsed an additional 547,000 bpd increase in its crude production for September 1. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production by September 2026. OPEC+ has 1.66 million bpd of supplies that are currently due to remain offline until late 2026. OPEC July crude production fell by -20,000 bpd to 28.31 million bpd.
A decline 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 -12% w/w to 82.49 million bbl in the week ended August 15.
Wednesday's weekly EIA report was mixed for crude oil and products. On the bullish side, EIA crude inventories fell -6.01 million bbl, a much larger draw than expectations of -850,000 bbl. Also, EIA gasoline supplies fell by -2.7 million bbl, more than expectations of -325,000 bbl. On the negative side, EIA distillate stockpiles rose by +2.3 million bbl, a larger build than expectations of +1.5 million bbl. Also, crude supplies at Cushing, the delivery point of WTI futures, rose by +419,000 bbl.
