February WTI crude oil (CLG26) today is up +0.94 (+1.58%), and February RBOB gasoline (RBG26) is up +0.0354 (+1.98%).

Crude oil and gasoline prices recovered from early losses today and rallied sharply after the dollar index (DXY00) tumbled to a 2-week low.  Also, reduced global crude supplies are supporting oil prices after Kazakhstan's largest oil producer shut production after fires at the Tengiz and Korolev oil fields.

Crude is rallying today after Reuters reported that Kazakhstan's Tengiz and Korolev oil fields will be shuttered for another 10 days due to fires at power generators.  Kazakhstan has curbed some 900,000 bpd of crude production that feeds the Caspian Pipeline Consortium terminal on Russia's Black Sea Coast due to drone strikes.

Unrest in Iran, OPEC's fourth-largest producer, is also underpinning crude prices as thousands of protesters have taken to the streets in many cities of Iran to protest government policies that have triggered a currency crisis and economic collapse.  Iranian security forces have killed thousands of protesters, and President Trump threatened attacks on Iranian government installations if the killing of protesters continues.  Reuters reported last Wednesday that some US personnel have been advised to leave the US Al Udeid Air base in Qatar.  The facility was targeted by Iran in retaliatory airstrikes last year after the US attacked Iran's nuclear facilities.  Iran, OPEC's fourth-largest producer, produces more than 3 million bpd, and its crude production could be disrupted if the protests against the government worsen and the US decides to strike government targets.  

Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -8.6% w/w to 115.18 million bbl in the week ended January 16.

Strength in Chinese crude demand is supportive for prices.  According to Kpler data, China's crude imports in December are set to increase by 10% m/m to a record 12.2 million bpd as it rebuilds its crude inventories.

Crude garnered support after OPEC+ on January 3 said it would stick to its plan to pause production increases in Q1 of 2026.  OPEC+ at its November 2025 meeting announced that members would raise production by +137,000 bpd in December, but will then pause the production hikes in Q1-2026 due to the emerging global oil surplus.  The IEA in mid-October forecasted a record global oil surplus of 4.0 million bpd for 2026.  OPEC+ is trying to restore all of the 2.2 million bpd production cut it made in early 2024, but still has another 1.2 million bpd of production left to restore.  OPEC's December crude production rose by +40,000 bpd to 29.03 million bpd.

Ukrainian drone and missile attacks have targeted at least 28 Russian refineries over the past five months, limiting Russia's crude oil export capabilities and reducing global oil supplies.  Also, since the end of November, Ukraine has ramped up attacks on Russian tankers, with at least six tankers attacked by drones and missiles in the Baltic Sea.  In addition, new US and EU sanctions on Russian oil companies, infrastructure, and tankers have curbed Russian oil exports.

Last month, the IEA projected that the world crude surplus will widen to a record 3.815 million bpd in 2026 from a 4-year high of over 2.0 million bpd in 2025.

Last Tuesday, the EIA raised its 2026 US crude production estimate to 13.59 million bpd from 13.53 million bpd last month, and cut its US 2026 energy consumption estimate to 95.37 (quadrillion btu) from 95.68 last month.

Last Wednesday's EIA report showed that (1) US crude oil inventories as of January 9 were -3.4% below the seasonal 5-year average, (2) gasoline inventories were +3.4% above the seasonal 5-year average, and (3) distillate inventories were -4.1% below the 5-year seasonal average.  US crude oil production in the week ending January 9 was down -0.4% w/w to 13.753 million bpd, just below the record high of 13.862 million bpd from the week of November 7.

Baker Hughes reported last Friday that the number of active US oil rigs in the week ended January 16 rose by +1 to 410 rigs, just above the 4.25-year low of 406 rigs posted in the week ended December 19.  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.