October WTI crude oil (CLV25) today is up +1.26 (+1.97%), and October RBOB gasoline (RBV25) is up +0.0660 (+3.35%).

Crude oil and gasoline prices are sharply higher today and posted 1-month highs.  Concerns over tighter global oil supplies are pushing crude prices higher today after Ukraine's attacks on Russian refineries have cut Russia's crude-processing runs to a 3-year low.  Also, comments from US Treasury Secretary Bessent were bullish for crude when he said the US would look at additional sanctions on Russia for prolonging the war in Ukraine.  

Limiting gains in crude today are a stronger dollar and the decline in the S&P 500 to a 1-week low, which reduces confidence in the economic outlook and energy demand.  Also, the weakness in today's US economic news on construction spending and manufacturing activity is negative for energy demand and crude prices.  

Reduced Russian crude output is tightening global oil supplies and is supportive of prices.  Ukrainian drone and missile attacks on Russian refineries have curbed Russia's crude-processing runs to 5.09 million bpd in the first 27 days of August, the lowest monthly average in over 3.25 years.  

Today's US economic news was mainly weaker-than-expected, a negative factor for energy demand and crude prices.   The Aug ISM manufacturing index rose +0.7 to 48.7, weaker than expectations of 49.0.  Also, Jul construction spending fell -0.1% m/m, the third consecutive month construction spending has declined.

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.  US Treasury Secretary Bessent said today that the US "will be examining sanctions on Russia very closely this week" due to the ongoing war in Ukraine.  President Trump has threatened "very big consequences" if Russia doesn't come to the negotiating table.  Last 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."  

A decrease 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 -18% w/w to 72.67 million bbl in the week ended August 29.

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.

Last Wednesday's weekly EIA report showed that (1) US crude oil inventories as of August 22 were -5.2% below the seasonal 5-year average, (2) gasoline inventories were -0.3% below the seasonal 5-year average, and (3) distillate inventories were -14.8% below the 5-year seasonal average.  US crude oil production in the week ending August 22 rose by +0.4% w/w to 13.439 million bpd, modestly below the record high of 13.631 million bpd posted in the week of 12/6/2024.

Baker Hughes reported last Friday that the number of active US oil rigs in the week ending August 29 rose by +1 to 412 rigs, just above the 3.75-year low of 410 rigs from August 1.  Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.25-year high of 627 rigs reported in December 2022.