US Crude Stocks: U.S. crude inventories fell by 1.4 million barrels to 422 million barrels, marking the third consecutive weekly decline, while crude stocks at the Cushing, Oklahoma hub decreased by 1.3 million barrels. Gasoline and distillate stockpiles rose significantly, with gasoline increasing by 5.1 million barrels and distillates by 3.2 million barrels, surpassing analysts' expectations. Refinery utilization rates remained strong at 92.4%, though crude runs fell by 251,000 barrels per day to 16.66 million bpd, and net U.S. crude imports dropped by 170,000 bpd. U.S. crude production reached a record high of 13.6 million bpd, reflecting ongoing growth in domestic output. Analysts highlighted the strong refinery activity and seasonal shifts in fuel demand, noting that high gasoline production coincides with lower seasonal demand.

US Sanctions on Russian Oil: The U.S. is exploring new ways to reduce Russia's oil revenue, leveraging a well-supplied global oil market with lower prices and decreased demand. Treasury Secretary Janet Yellen emphasized that sanctions aim to weaken Russia's ability to fund its war against Ukraine, with a focus on curbing its oil income. Russia has invested in its own fleet to bypass Western price caps, but the U.S. sees the current oil market conditions as an opportunity for further action. The U.S. also transferred $20 billion to a World Bank fund as part of a broader G7 effort to support Ukraine's economic and financial stability. This move fulfills a prior commitment to match the EU's aid contribution using frozen Russian sovereign assets.

India-Russia Oil Supply Deal: Russia's Rosneft has signed a 10-year deal to supply nearly 500,000 barrels per day of crude oil to India's Reliance, marking the largest-ever energy agreement between the two nations, valued at approximately $13 billion annually. The deal strengthens India-Russia energy ties as Western sanctions on Russian oil push India to become Russia's top oil importer, benefiting from cheaper crude priced $3-$4 below rival grades. The contract will supply Reliance's Jamnagar refinery, the world's largest, with 20-21 cargoes of Russian crude and three cargoes of fuel oil monthly, while pricing and volumes will be reviewed annually. This agreement secures nearly half of Rosneft's seaborne oil exports and heightens competition with Middle Eastern producers for India's fast-growing energy market. Supplies will begin in January 2024 with the possibility of a 10-year extension, positioning Russia as a dominant player in India’s energy imports.

Market Overview: Oil prices remained mostly steady today as forecasts for ample supply offset optimism tied to potential U.S. interest rate cuts. The International Energy Agency projected a well-supplied oil market in 2024, despite slightly raising its demand outlook, while OPEC reduced its demand growth forecast for the fifth consecutive month. U.S. inflation data aligned with expectations, fueling hopes for a Federal Reserve rate cut, which could boost economic growth and energy demand. Meanwhile, China's plans for looser monetary policy in 2025 raised expectations for higher Chinese oil demand, though weak current demand and growing U.S. fuel inventories kept price moves limited. Additional market focus is on upcoming Fed decisions and potential new sanctions on Russian oil, as global geopolitical and economic factors continue to influence oil prices.

Crude has traded in a narrow range since mid-October, buffeted by a series of bullish and bearish factors including Middle East tensions and expectations for a global glut. The Biden administration is considering new sanctions on Russia’s oil trade, a move that could tighten the market and drive up prices. The Organization of the Petroleum Exporting Countries will issue its report on supply and demand later Wednesday, which will be followed Thursday by a monthly release from the International Energy Agency. The US has reversed its prediction for a surplus and is now forecasting a small deficit in 2025,according to a report from the Energy Information Administration on Tuesday. China, meanwhile, is set to start its annual work meeting on Wednesday to map out policies for next year. The two-day Central Economic Work Conference will likely discuss setting a growth goal for 2025, but specific figures will only be announced in March during a gathering of the legislature.

Oil prices remained nearly unchanged as forecasts of ample supply countered optimism from expectations of a U.S. Federal Reserve interest rate cut. The International Energy Agency revised its demand outlook upward but still expects sufficient supply, while OPEC reduced its demand growth forecast for 2024. U.S. inflation data supported hopes of a Fed rate cut, bolstering energy demand sentiment, despite higher-than-expected gasoline and distillate inventories. Global oil demand showed resilience despite slower growth, with Chinese crude imports rising 14% year-on-year, while Middle East tensions over Iran's nuclear activities also influenced market sentiment.