Morning Highlights: Oil steadies as weak data offsets U.S. inventory draws

Wednesday, November 5, 2025

Oil prices were little changed as traders weighed weak manufacturing data from top importers against signs of firmer U.S. fuel demand and continued supply disruptions from Ukraine’s attacks on Russian energy infrastructure.

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Market Snapshot

• Brent crude rose 32 cents to $64.76 a barrel by 6:00 EST.

• WTI gained 32 cents to $60.88.

• Dollar index hovered near a three-month high, limiting oil’s upside.

• Both benchmarks rebounded modestly after touching two-week lows in the prior session.

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Macro & Demand

• China’s factory activity contracted for a seventh straight month in October, signaling prolonged industrial weakness.

• U.S. manufacturing shrank for an eighth consecutive month, reinforcing concerns about slowing global demand.

• A stronger U.S. dollar made crude costlier for holders of other currencies.

• API data showed crude inventories rose, while gasoline and distillate stocks fell, suggesting firmer underlying demand.

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OPEC+ & Supply

• OPEC+ agreed to raise output by 137,000 bpd in December but will pause further hikes in early 2026 amid potential oversupply concerns.

• Gunvor’s CEO noted Western sanctions on Russia and Iran have led to record volumes in floating storage, temporarily absorbing surplus barrels.

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Geopolitics

• Ukrainian drones struck Russia’s Tuapse oil port on November 2, igniting a fire and forcing Rosneft’s 240,000 bpd refinery offline.

• The export-oriented refinery, supplying China, Malaysia, Singapore, and Turkey, remains shut with vessels anchored offshore.

• The attack underscored escalating energy-related warfare as the conflict nears its fourth year.

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Russia & Sanctions Fallout

• Iraq’s SOMO canceled three November crude loadings from Lukoil’s West Qurna-2 field (400,000 bpd capacity) after new U.S. sanctions on Rosneft and Lukoil.

• Traders and refiners are avoiding Russian barrels to steer clear of potential secondary sanctions.

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Oil markets are finding a temporary floor as stronger U.S. product demand counters headwinds from soft macro data and a firmer dollar. Supply disruptions in Russia add a measure of geopolitical support, but OPEC+’s cautious output stance and sluggish manufacturing momentum continue to cap rallies.