January WTI crude oil (CLF25) Wednesday closed down -1.40 (-2.00%), and January RBOB gasoline (RBF25) closed down -0.0233 (-1.19%).

Crude oil and gasoline prices Wednesday gave up an early advance and settled moderately lower.  Weaker than expected US economic news Wednesday on Nov ADP employment and Nov ISM services is negative for energy demand and weighed on crude prices.   Wednesday's rally in the S&P 500 to a new record high supported crude as it shows confidence in the economic outlook supporting energy demand and crude prices.  Wednesday's weekly EIA report was mixed for crude and products after crude inventories fell more than expected, but gasoline and distillate stockpiles unexpectedly rose.

Wednesday's US economic news was weaker than expected and bearish for crude prices.  The Nov ADP employment change rose +146,000, slightly weaker than expectations of +150,000.  Also, the Nov ISM services index fell -3.9 to 52.1, weaker than expectations of 55.3.

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 -2.5% w/w to 68.74 million bbl in the week ended November 29.

Crude has support from expectations that OPEC+ will delay an expected +180,000 bpd of production from January until Q2 of 2025, when the group meets online on December 5.  The group had previously agreed to restore 2.2 million bpd of output in monthly installments between January and late 2025.  Also, the UAE is being allowed to gradually phase in a further 300,000 bpd in recognition of recent increases in its production capacity.  OPEC Nov crude production rose +120,000 bpd to 27.02 million bpd.

Escalation of the Ukraine-Russian war is supportive of crude prices.  Russia launched a new hypersonic missile into the city of Dnipro late last month, following Ukraine's expanded use of Western-provided long-range missiles against targets inside Russia,  and Russian President Putin warned that Russia could strike “decision-making centers” in Kyiv with ballistic missiles.   Last week, Putin also approved an updated nuclear doctrine that expands the conditions for Russia to use atomic weapons, including in response to a conventional attack on its soil.  

Crude demand in China has weakened and is a bearish factor for oil prices.  According to data compiled by Bloomberg, China's Oct apparent oil demand fell -5.4% y/y to 14.07 million bpd, and Jan-Oct apparent oil demand was down -4.03% y/y to 14.00 million bpd.  China is the world's second-largest crude consumer.

An increase in Russian crude exports is bearish for crude.  Weekly vessel-tracking data from Bloomberg showed Russian crude exports rose by +570,000 bpd to 3.36 million bpd in the week to December 1.  

Wednesday's weekly EIA report was mixed for crude and products.  On the supportive side, EIA crude inventories fell -5.07 million bbl, a larger draw than expectations of -1.41 million bbl.  Conversely, EIA gasoline supplies unexpectedly rose +2.36 million bbl versus expectations of a -1.04 million bbl draw.  Also, EIA distillate stockpiles unexpectedly rose +3.38 million bbl versus expectations of a -424,000 bbl draw.  In addition, US crude production in the week of November 29 rose to a record 13.513 million bpd.  

Wednesday's EIA report showed that (1) US crude oil inventories as of November 29 were -5.0% below the seasonal 5-year average, (2) gasoline inventories were -4.3% below the seasonal 5-year average, and (3) distillate inventories were -4.8% below the 5-year seasonal average.  US crude oil production in the week ending November 29 rose +0.1%  w/w to a record 13.513 million bpd.

Baker Hughes reported last Wednesday that active US oil rigs in the week ending November 29 fell -2 rigs and matched the 2-3/4 year low of 477 rigs first posted in the week ending July 19.  The number of US oil rigs has fallen over the past two years from the 4-1/2 year high of 627 rigs posted in December 2022.