October WTI crude oil (CLV25) on Friday closed down -0.59 (-0.91%), and October RBOB gasoline (RBV25) closed down -0.0213 (-1.07%).
Crude oil and gasoline prices moved lower on Friday as a slide in stocks prompted a risk-off sentiment in asset markets. Also, Friday’s weaker-than-expected global economic news was bearish for energy demand and crude prices. Losses in crude were limited on speculation that Europe and its allies will ramp up sanctions on Russia for not seeking to end the war in Ukraine.
Friday’s global economic news was mainly weaker-than-expected, a negative factor for energy demand and crude prices. The University of Michigan US Aug consumer sentiment index was revised lower by -0.4 to 58.2, weaker than expectations of no change at 58.6. Also, the US Aug MNI Chicago PMI fell -5.6 to 41.5, weaker than expectations of 46.0. In addition, German Jul retail sales fell -1.5% m/m, weaker than expectations of no change and the biggest decline in almost two years. Finally, Japan’s Jul industrial production fell -1.6% m/m, weaker than expectations of -1.1% m/m and the largest decline in 8 months.
Crude prices have support on concerns that the ongoing war in Ukraine could lead to additional sanctions on Russian energy exports, reducing global oil supplies. On Friday, German Chancellor Merz and French President Macron called for secondary sanctions on Russia for its war in Ukraine. They said they will push for measures targeting “companies from third countries that support Russia’s war.” President Trump also threatened “very big consequences” if Russia doesn’t come to the negotiating table. On Thursday, German Chancellor Merz stated that a meeting between Russian President Putin and Ukrainian President Zelensky was unlikely to occur.
An increase in crude oil held worldwide on tankers is bearish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days rose by +11% w/w to 96.77 million bbl in the week ended August 22.
Concerns about higher OPEC production are negative for 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+ will meet again on September 7. OPEC July crude production fell by -20,000 bpd to 28.31 million bpd.
