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."  

Concerns about higher OPEC production are negative for crude prices after OPEC+ on August 2 endorsed an additional 547,000 bpd increase in its crude production for September 1.  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+ has 1.66 million bpd of supplies that are currently due to remain offline until late 2026.  OPEC July crude production fell by -20,000 bpd to 28.31 million bpd.

The consensus is that Wednesday's weekly EIA crude inventories fell by -2.0 million barrels, and gasoline supplies declined by -1.6 million barrels.

Last Wednesday's weekly EIA report showed that (1) US crude oil inventories as of August 15 were -5.6% below the seasonal 5-year average, (2) gasoline inventories were -0.7% below the seasonal 5-year average, and (3) distillate inventories were -13.0% below the 5-year seasonal average.  US crude oil production in the week ending August 15 rose by +0.4% w/w to 13.382 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 August 22 fell by -1 to 411 rigs, just above the 3.75-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 5.25-year high of 627 rigs reported in December 2022.