Russian Refinery Drone Strike: Ukrainian drones hit a second Russian oil refinery in a week, the target is reported to be the Afipskiy oil refinery, a key facility processing 6.25 million tons of oil annually. The refinery, located roughly 125 miles from the front line, is a strategic logistics hub for diesel fuel and aviation fuel used by Russian troops. The attack a week ago hit a refinery in the Volgograd region, which is one of Russia’s 10 biggest refining facilities, processing close to 6% of the country’s oil.
U.S. Energy Stocks: An early Reuters poll is showing expectations that this week’s EIA Energy Stock Report will show U.S. crude and gasoline stockpiles likely rose last week, while distillate stocks are seen down. The poll indicates expectations that crude inventories rose by about 2.6 million barrels, a projected gasoline stock rise of 1.6 million barrels, and distillate stocks are estimated to have dropped by 933,000 barrels. The rate of refinery utilization is estimated to have risen by just 0.3% from 84.5% of total capacity.
U.S. Unemployment: Nonfarm payrolls climbed by 143,000 for the month of January 2025, down from 307,000 in December and below the anticipated 175,000 expectation. (The unemployment rate fell slightly lower from 4.1% to 4.0%.) Market reactions to the January jobs report were muted as U.S. equity markets showed little change after the report's release, while investors assessed the mixed signals from the labor market data.
Market Overview: Oil prices are on the rise again this morning, largely due to fears about disruptions in oil supplies from Russia and Iran. These concerns stem from ongoing geopolitical tensions, including sanctions and production restrictions. At the same time, the worries about escalating trade tariffs are significant, as they could slow down global demand for oil by dampening economic growth, especially in major economies like the U.S. and China.
U.S. Monthly 'New-well' Oil Production by Region
The Bakken and Permian basins recorded the highest monthly new-well oil production per rig in December 2024, at 1,696 and 1,491 barrels per day, respectively. The Permian basin is also the largest oil producing region overall. Despite the overall decrease in rig counts, U.S. oil production has remained robust. The country reached a production peak of nearly 19.4 million barrels per day in 2023, solidifying its position as the world's leading oil producer. The Bakken and Permian basins have demonstrated particularly high efficiency in terms of new-well oil production per rig.
WTI crude oil futures marched above $73 per barrel in today’s trading, influenced by signs of tighter Russian supply, rising geopolitical risks and high global natural gas prices. Gains were capped by caution over mounting trade tensions and sizeable economic uncertainty, as Trump’s recent steel and aluminum tariffs could potentially disrupt the U.S. energy sector, particularly oil drillers reliant on specialty steel that is currently imported and unavailable domestically. Heating Oil futures showed the most strength, rising close to 3% to a settle of $2.5146. RBOB was close behind, rising 2% to $2.1473, while crude rose $1.00 to $73.32.
