Oct WTI crude oil (CLV20) on Friday closed up +0.03 (+0.08%), Nov Brent crude oil (CBX20) closed down -0.12 (-0.30%), and Oct RBOB gasoline (RBV20) closed down -0.0028 (-0.26%).

The energy complex on Friday settled mixed with RBOB gasoline at a 3-month nearest-futures low. Global demand concerns continue to weigh on crude prices. Also, crude prices are under pressure on negative carry-over from Thursday when the EIA reported an unexpected increase in U.S. crude inventories. Losses in crude were limited due to a weaker dollar.

Global energy demand concerns are bearish for crude prices. S&P Global Platts predicts global 2020 crude demand will fall -8.1 million bpd amid the Covid pandemic and is unlikely to get back to 2019 levels before 2022.

Signs of cheating on OPEC oil production quotas is negative for prices. The United Arab Emirates (UAE) pumped 3.0 million bpd in July, and UAE Energy Minister Suhail Al Mazrouei said his country's crude production was 2.693 million bpd in Aug, above the 2.59 million bpd production cap that OPEC+ agreed to in April. The cheating on quotas could raise new tensions when the OPEC+ Joint Ministerial Monitoring Committee (JMMC) meets on Sep 17.

Signs of weak U.S. fuel demand are bearish for crude prices. The 4-week average for U.S. jet fuel demand fell to 981,000 bpd the week of Sep 4, the lowest in 7 weeks, and the fourth decline in the past five weeks. Also, data from OPIS showed U.S gasoline demand fell -1.9% in the last week of Aug from the prior week, and the 4-week rolling average for the period ending Aug 29 shows gasoline demand down -18.2% below prior-year levels.

Crude prices had negative carry-over Friday from Thursday when the EIA reported crude inventories unexpectedly rose +2.03 million bbl, above expectations for a -2.5 million bbl draw.

Another bearish factor for crude is robust crude supplies stored in floating oil tankers. Data from Vortexa shows the amount of crude in floating storage as of Sep 4 was 168.08 million bbl, up +232% from a year ago, and a sign the world is awash with crude.

The ongoing Covid pandemic has undercut global growth and energy demand and is bearish for crude prices. Infections have risen above 28.371 million around the world, with deaths exceeding 914,000.

A positive factor for crude was Wednesday's monthly Short-Term Energy Outlook, where the EIA cut its U.S. 2021 crude production estimate to 11.08 million bpd from an Aug estimate of 11.14 million bpd.

Friday's data from Baker Hughes showed that active U.S. oil rigs fell by -1 rig in the week ended Sep 11 to 180 rigs, moderately above the 15-year low of 172 rigs posted in the week ended Aug 14. Baker Hughes reported Sep 4 that the number of global active oil rigs in Aug rose by +20 to 1,050, the first increase in six months after they had fallen to 1,030 active oil rigs in July, the fewest since the data began in 1975.

Thursday’s weekly EIA data showed that (1) U.S. crude oil inventories as of Sep 4 were +14.4% above the seasonal 5-year average, (2) gasoline inventories were +3.0% above the 5-year average, and (3) distillate inventories were +20.6% above the 5-year average. U.S. crude production in the week ended Sep 4 rose +3.1% w/w to 10.0 million bpd, which was down by -3.1 million bpd (-23.7%) from Feb's record-high of 13.1 million bpd.

Big Picture Crude Oil Market Factors: Bearish factors include (1) the major damage done to global energy demand by the Covid pandemic, (2) the large global oil surplus despite the OPEC+ production cut that took effect on May 1, (3) the OPEC+ agreement to taper its crude production cuts to 7.7 million barrels/day for August from 9.6 million bpd in July, (4) high U.S. crude oil inventories that stand +14.4% above the seasonal 5-year average, (5) high gasoline inventories that stand +3.0% above the 5-year average, and (6) high distillate inventories that stand +20.6% above the 5-year average.

Bullish factors include (1) the OPEC+ production cut agreement of 7.7 million bpd for August, although that is less than 9.6-9.7 million bpd during May-July, (2) the decline in U.S. and global oil production that is being forced by negative market conditions, (3) the slump in active global oil rigs in July to 1,030 rigs, the fewest since the data began in 1975, which will lead to lower global crude output, (4) the sharp decline in OPEC June crude oil production by -1.93 million bpd to a 29-year low of 22.62 million bpd, (5) China's increase purchases of U.S. oil for September delivery as it seeks to meet January's U.S./China phase-one trade deal that called for China to boost its purchases of U.S. energy products by $52 billion over the next two years, and (6) the sharp drop in Iranian oil production due to U.S. sanctions and in Venezuelan oil production due to U.S. sanctions and domestic turmoil.