October WTI crude oil (CLV25) on Wednesday closed down -0.47 (-0.73%), and October RBOB gasoline (RBV25) closed down -0.0129 (-0.63%).

Crude oil and gasoline prices were under pressure on Wednesday from energy demand concerns.  Wednesday's weaker-than-expected US housing starts and building permits reports were bearish for the economy and energy demand.  Losses in crude were limited after weekly EIA crude inventories and gasoline supplies fell more than expected.  

In a negative factor for energy demand and crude prices, Aug US housing starts fell -8.5% m/m to 1.307 million, weaker than expectations of 1.365 million.  Also, Aug building permits, a proxy for future construction, unexpectedly fell -3.7% m/m to a 5.25-year low of 1.312 million, weaker than expectations of an increase to 1.370 million.

Ukraine has stepped up its attacks on Russian refineries and oil infrastructure, which is bullish for crude prices as it curbs Russian crude exports and tightens global oil supplies.  Reuters reported Tuesday that Russia's Transneft Pipeline, which handles more than 80% of the country's oil, has restricted the ability to store crude.  Also, the Kirishi refinery, one of Russia's biggest refineries that has an annual processing capacity of over 20 million tons, halted crude processing after damage caused by a Ukrainian drone attack on Sunday.  In addition, Ukrainian drone attacks have damaged Russian oil infrastructure and crude-exporting hubs along Russia's Baltic Coast.  Ukrainian drone and missile attacks on Russian refineries have curbed Russia's crude-processing runs to 4.98 million bpd in the first three days of September, the lowest monthly average in over 3.25 years.  

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.  President Trump said last Friday that his patience with Russian President Putin was "running out fast" for continuing the war in Ukraine, and he threatened new economic sanctions against Russia.  The US proposed that the Group of Seven allies impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince Russia to end the war in Ukraine.

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 -7.2% w/w to 67.96 million bbl in the week ended September 12.

Crude prices also have support after OPEC+ agreed on September 7 to raise its crude production by 137,000 bpd, starting in October.  This is less than the 547,000 bpd increase the group decided to boost output in September and August.  OPEC+ also said restarting the remainder of the 1.66 million bpd crude production it had idled will be contingent on "evolving market conditions."  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 Aug crude production rose by +400,000 bpd to 28.55 million bpd, the highest in over two years.

Concerns about a global oil glut are bearish for crude prices after the International Energy Agency (IEA) last Thursday boosted its 2026 global crude surplus estimate to 3.33 million bpd, +360,000 bpd higher than anticipated in August, citing plans by OPEC+ to revive its crude production.

Wednesday's weekly EIA report was mixed for crude and products.  On the negative side, EIA distillate stockpiles rose +4.0 million bbl to an 8-month high, a larger build than expectations of +1.1 million bbl.  On the positive side, EIA crude inventories unexpectedly fell by -9.29 million bbl versus expectations of a +1.75 million bbl build.  Also, EIA gasoline supplies unexpectedly fell -2.4 million bl to a 9-month low versus expectations of a +675,000 bbl build.  In addition, crude supplies at Cushing, the delivery point of WTI futures, fell by -296,000 bbl.  

Wednesday's EIA report showed that (1) US crude oil inventories as of September 12 were -4.7% below the seasonal 5-year average, (2) gasoline inventories were -1.6% below the seasonal 5-year average, and (3) distillate inventories were -7.4% below the 5-year seasonal average.  US crude oil production in the week ending September 12 fell by -0.1% w/w to 13.482 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 September 12 rose by +2 to 416 rigs, just above the 4-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 5.5-year high of 627 rigs reported in December 2022.