January WTI crude oil (CLF25) Friday closed down -1.10 (-1.61%), and January RBOB gasoline (RBF25) closed down -0.0263 (-1.36%).

Crude oil and gasoline prices posted moderate losses on Friday, with crude sliding to a 2-1/2 week low and gasoline falling to a 2-month low.  A stronger dollar Friday weighed on energy prices.  Crude prices were also under pressure Friday on a report from Macquarie Group that projects a "heavy surplus" of more than 1 million bpd next year as non-OPEC supply growth makes up for any supply restraints from OPEC+.  Limiting losses in crude was better-than-expected US economic reports on Nov payrolls and Dec consumer sentiment, supportive factors for energy demand.

Friday's global economic news was mixed for crude prices.  On the negative side, the US Nov unemployment rate unexpectedly rose +0.1 to 4.2%, showing a weaker labor market than expectations of no change at 4.1%.  Also, German Oct industrial production unexpectedly fell -1.0% m/m, weaker than expectations of +1.0% m/m.  Conversely, US Nov nonfarm payrolls rose +227,000, stronger than expectations of +220,000.  Also, the University of Michigan US Dec consumer sentiment index rose +2.2 to an 8-month high of 74.0, stronger than expectations of 73.2.

Crude found support Thursday after OPEC+ pushed back a planned hike of its crude production by +180,000 bpd from January to April and said it would unwind its crude output cuts at a slower pace than planned.  Also, the United Arab Emirates (UAE) said it will delay the planned 300,000 bpd increase in its crude production target from January to April.  OPEC+ had previously agreed to restore 2.2 million bpd of output in monthly installments between January and late 2025.  However, that is now pushed back until September 2026.  OPEC Nov crude production rose +120,000 bpd to 27.02 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 -2.5% w/w to 68.74 million bbl in the week ended November 29.

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 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 Friday that active US oil rigs in the week ending December 6 rose +5 rigs to 482 rigs, rebounding from the previous week's 2-3/4 year low of 477 rigs.  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.