October WTI crude oil (CLV25) on Tuesday closed down -1.55 (-2.39%), and October RBOB gasoline (RBV25) closed down -0.0370 (-1.86%).
Crude oil and gasoline prices retreated on Tuesday as global crude supply concerns eased after Russia said one of its largest refineries will soon restart after repairs were made following a Ukrainian drone attack. Gasoline prices were also under pressure as supply concerns eased with the restart of the BP refinery in Whiting, Indiana, the largest inland refinery in the US. The 115,000 bpd Pipestill unit, which had been shuttered since August 19 due to storms and flooding, has now resumed operations.
Tuesday’s weaker dollar and better-than-expected US economic news were supportive for crude prices. July US capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, rose +1.1% m/m, stronger than expectations of +0.2% m/m. Also, the Conference Board US Aug consumer confidence index fell -1.3 to 97.4, stronger than expectations of 96.5. In addition, the Aug Richmond Fed manufacturing survey rose +13 to a 5-month high of -7, stronger than expectations of -11.
Global crude supply concerns eased after Russia announced that its Volgograd refinery, which can process 300,000 bpd of crude oil, will resume operations a week earlier than planned, as repairs to the refinery were made following drone attacks by Ukraine.
Weakness in the crude crack spread is bearish for oil prices as the crack spread fell to a 2.25-month low on Tuesday. The weaker spread discourages refiners from purchasing crude oil and refining it into gasoline and distillates.
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.
Crude prices also have support on concern that the Russian-Ukrainian war will continue, which could keep restrictions on Russian crude exports in place, and even secondary restrictions could be added. Russian Foreign Minister Lavrov said Sunday that there was no meeting planned between the leaders of Russia and Ukraine and that there “needs to be an agenda first” for a meeting to take place. “This agenda is not ready at all.”
