April WTI crude oil (CLJ25) Tuesday closed up +0.22 (+0.33%), and April RBOB gasoline (RBJ25) closed up +0.0125 (+0.60%).

Crude oil and gasoline prices recovered from early losses and posted mild gains on Tuesday.  The fall in the dollar index (DXY00) Tuesday to a 4-3/4 month low sparked short covering in crude.  Also, the Trump administration said it was prepared to enforce US sanctions on Iranian crude production, potentially tightening global oil supplies.

Crude oil prices were undercut Tuesday after the S&P 500 slid to a 5-3/4 month low, which curbed optimism in the economic outlook and energy demand.  Crude oil prices continue to be undercut by concern that US tariffs will dampen economic growth and energy demand.

Crude prices have support from last Thursday when US Energy Secretary Wright said that he plans to seek up to $20 billion to refill the Strategic Petroleum Reserve, which currently stands at 395 million bbl but can hold a maximum of 700 million bbl.

Crude has carryover support from last Thursday when  Treasury Secretary Bessent said the US is willing to "shut down" Iran's oil sector to achieve peace in the Middle East.  

Ramped-up Russian oil exports are negative for crude prices after data compiled by Bloomberg from analytics firm Vortexa showed Russian Feb oil products exports reached a 1-year high of 2.5 million bpd.

Crude prices were undercut when OPEC+ said last Monday it would restart some halted crude output in April, adding 138,000 bpd to global supplies.  That is the first of a series of monthly hikes to reverse the 2-year-long production cut, which will gradually restore a total of 2.2 million bpd.  OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won't be fully restored until September 2026.  OPEC Feb crude production rose +320,000 bpd to a 14-month high of 27.35 million bpd.

In a supportive factor for crude oil prices, the US on January 10 imposed new sanctions on Russia's oil industry that could curb global oil supplies.  The measures targeted Gazprom Neft and Surgutneftgas, which exported about 970,000 bpd of Russian crude in the first 10 months of 2024, accounting for about 30% of its tanker flow, according to Bloomberg data.  The US also targeted insurers and traders linked to hundreds of tanker cargoes.  Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -45,000 bpd to 3.48 million bpd in the week to March 9.  

Crude oil demand in China has weakened and is a bearish factor for oil prices.  According to Chinese customs data, China's 2024 crude imports fell -1.9% y/y to 553 MMT.  China is the world's biggest crude importer.

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 +4.9% w/w to 84.15 million bbl in the week ended March 7.

The consensus is that Wednesday's weekly EIA crude inventories will climb by +2.0 million bbl, and gasoline supplies will fall by -1.6 million bbl.

Last Wednesday's EIA report showed that (1) US crude oil inventories as of February 28 were -4.3% below the seasonal 5-year average, (2) gasoline inventories were +1.3% above the seasonal 5-year average, and (3) distillate inventories were -5.5% below the 5-year seasonal average.  US crude oil production in the week ending February 28 was unchanged w/w at 13.508 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6.

Baker Hughes reported last Friday that active US oil rigs in the week ending March 7 were unchanged at 486 rigs, moderately above the 3-year low of 472 rigs posted on January 24.  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.