US Oil Demand Growth and Geopolitical Tensions Push US and European Oil Futures to Nearly One-Week High

Market participants anticipate that sanctions against Russia will persist due to the lack of progress on a peace agreement in Ukraine. Meanwhile, data shows an increase in U.S. oil consumption, pushing European and American crude oil futures to nearly a one-week high. On Wednesday, October 8th, the settlement price for November 2025 futures of West Texas Intermediate crude oil on the New York Mercantile Exchange was $62.55 per barrel, up $0.82 from the previous trading day, a rise of 1.33%, with a trading range of $62.05-$62.92. The settlement price for December 2025 futures of Brent crude oil on the London Intercontinental Exchange was $66.25 per barrel, up $0.80 from the previous trading day, a rise of 1.22%, with a trading range of $65.76-$66.54.

The armed conflict between Russia and Ukraine has intensified, raising concerns among oil market participants about disruptions to Russian oil exports, which has supported international oil prices. On the 8th local time, Russian media quoted Russian Deputy Foreign Minister Ryabkov as saying that the momentum for mediation on the Ukraine issue generated by the meeting between the presidents of Russia and the United States in Alaska has been almost exhausted.

However, according to Interfax, Russian Deputy Prime Minister Novak stated on Wednesday that despite sanctions, Russia is gradually increasing its oil production and has nearly reached the production quota set by OPEC+ last month.

Since the beginning of this week, international oil prices have risen by about 3%. The reason is that the OPEC+ organization announced a lower-than-expected increase in production for November on Sunday. PVM oil analyst Tamas Varga stated in a report on Wednesday: "Although OPEC+ made only minimal decisions to increase production on Sunday, these decisions still provided some support for the market."

Phil Flynn of the Price Futures Group said in a report: "So far, the claims of an oil supply glut have not been reflected in the data." He also said, "There are signs that OPEC's spare capacity may be running out amid persistent supply risks due to the protracted Russia-Ukraine war." He believes, "The demand for oil in the market is very strong, which should be able to sustain stable market development."

U.S. gasoline demand and distillate demand have increased week-on-week. According to the U.S. Energy Information Administration, for the four weeks ending October 3, the average total demand for petroleum products in the U.S. was 20.897 million barrels per day, which is 1.7% higher than the same period last year; the average daily demand for motor gasoline over the four weeks was 8.802 million barrels, which is 2.6% lower than the same period last year; the average daily demand for distillates was 3.83 million barrels, which is 1.1% lower than the same period last year; and the average daily demand for kerosene-type jet fuel was 6.9% lower than the same period last year. In the most recent week, the total U.S. oil demand averaged 21.99 million barrels per day, an increase of 182.4 thousand barrels from the previous week; among this, the daily demand for gasoline was 8.919 million barrels, an increase of 401 thousand barrels from the previous week; and the average daily demand for distillates was 4.346 million barrels, an increase of 730 thousand barrels from the previous week.

Last week, the operating rates of U.S. refineries increased, leading to a rise in crude oil processing volume by the refineries. However, net crude oil imports increased by nearly 5.1 million barrels, resulting in an increase in U.S. commercial crude oil inventories. Due to increased demand for refined products, gasoline and distillate inventories in the U.S. both decreased last week. According to data from the U.S. Energy Information Administration, for the week ending October 3, the total U.S. crude oil inventory, including the strategic reserve, was 827.246 million barrels, an increase of 4 million barrels from the previous week. The U.S. commercial crude oil inventory was 420.261 million barrels, up by 3.715 million barrels from the previous week. The total gasoline inventory was 219.093 million barrels, a decrease of 1.6 million barrels from the previous week. The distillate inventory was 121.559 million barrels, down by 2.018 million barrels from the previous week. The commercial crude oil inventory was 0.59% lower than the same period last year and 4% lower than the five-year average for the same period. Gasoline inventory was 1.95% higher than the same period last year but 1% lower than the five-year average. Distillate inventory was 2.57% higher than the same period last year but 6% lower than the five-year average. The total U.S. commercial petroleum inventory decreased by 1.23 million barrels. The total refining throughput was an average of 16.297 million barrels per day, an increase of 130,000 barrels per day from the previous week, with the refinery operating rate at 92.4%, up by 1 percentage point from the previous week. Last week, the average daily crude oil import volume was 6.403 million barrels, an increase of 570,000 barrels from the previous week, while the daily import volume of refined products was 176,800 barrels, a decrease of 331,000 barrels from the previous week. In the closely watched Cushing, Oklahoma region, crude oil inventories were 22.704 million barrels, a decrease of 763,000 barrels. Over the past week, the U.S. Strategic Petroleum Reserve was 406.985 million barrels, an increase of 285,000 barrels.

For the week ending October 3, the average daily export volume of U.S. crude oil was 3.59 million barrels, a decrease of 161,000 barrels per day compared to the previous week, and a decrease of 204,000 barrels per day compared to the same period last year. Over the past four weeks, the average daily export volume of U.S. crude oil was 4.276 million barrels, an increase of 5.8% year-on-year. Since the beginning of this year, the average daily export volume of U.S. crude oil has been 3.856 million barrels, a decrease of 6.8% year-on-year. Over the past week, the average daily net import volume of U.S. crude oil was 2.813 million barrels, an increase of 731,000 barrels compared to the previous week. The average daily net export volume of U.S. refined oil products was 5.042 million barrels, a decrease of 10,700 barrels compared to the previous week. The total average daily net export volume of U.S. crude oil and refined oil products was 2.229 million barrels, a decrease of 83,800 barrels compared to the previous week.

As of the week ending October 3, the average daily production of crude oil in the United States was 13.629 million barrels, an increase of 124,000 barrels compared to the previous week and an increase of 229,000 barrels compared to the same period last year. For the four weeks ending October 3, the average daily production of crude oil in the U.S. was 13.529 million barrels, which is 1.9% higher than the same period last year. Since the beginning of this year, the average daily production of crude oil in the U.S. has been 13.445 million barrels, also 1.9% higher than the same period last year.

Another factor supporting crude oil futures prices is that investors believe the Federal Reserve will continue to lower interest rates in the event of a prolonged government shutdown in the United States.

The U.S. federal government remains in a shutdown, preventing investors from accessing most of the country's economic data. However, the Federal Reserve released the minutes of its September 16-17 meeting at 2 p.m. Eastern Time on Wednesday. According to the newly released minutes, Fed officials largely agreed that the recent slowdown in employment growth outweighed concerns about persistently high inflation. Therefore, at the September meeting, they decided to lower the benchmark interest rate by 0.25 percentage points, setting the rate range at 4% to 4.25%, marking the Fed's first rate cut this year. This adjustment aligns with the expectations previously indicated by the CME Group's FedWatch tool but did not meet the 0.5 percentage point rate cut advocated by Stephen Miran, the newly appointed Federal Reserve governor by Trump who was sworn in on the morning of the September meeting. However, the minutes also revealed that most Fed officials believe that further easing of policy by the Federal Reserve may be appropriate for the remainder of the year.

The Federal Reserve controls inflation by adjusting interest rates. Lower interest rates reduce the borrowing costs for consumers, thereby promoting economic growth and increasing the demand for oil.