Crude and Spreads Resume Gains on Tighter Supply Risk and US Stock Draws

Crude front month has resumed the weekly gains after briefly falling to a low of just over 75$/bbl yesterday driven by demand concerns the release of US PMI data. The risk of further central bank tightening has this week been offset by a reduction in supplies and another decline in US inventories.

• Brent SEP 23 up 0.4% at 76.84$/bbl
• WTI AUG 23 up 0.4% at 72.12$/bbl
• Gasoil JUL 23 up 2.5% at 738.25$/mt
• WTI-Brent down -0.05$/bbl at -4.75$/bbl
• Saudi Aramco yesterday raised OSPs to Asia and Europe for August after the country pledged to extend production cuts earlier in the week. Some Asia and EU oil buyers are looking to reduce oil volumes for August switching to the spot market to meet any short fall according to Bloomberg. OPEC forecasts for 2024 oil demand growth to be lower than this year of 2.35mbpd.
• People familiar with the matter said Russia does not plan to deepen crude production to fulfill its pledge to reduce its August crude exports by 500kbpd.
• EIA data showed US crude oil stocks declined by 1.5mbbls last week and roughly in line with expectations following the big draw the previous week as the market watches for signs of tightening supplies into the second half of the year.
  • Brent SEP 23-OCT 23 up 0.02$/bbl at 0.32$/bbl
  • Brent DEC 23-DEC 24 unchanged at 3.24$/bbl
• The crude prompt time spreads have rallied this week reflecting the tighter supplies from OPEC+ member production cuts. The Brent Sep-Oct spread is trading up over 0.3$/bbl with the prompt WTI spreads also rallying up into backwardation. The Dec23-Dec24 spread has recovered all the losses seen in late June.
  • US gasoline crack up 0.3$/bbl at 35.51$/bbl
  • US ULSD crack up 0.3$/bbl at 32.88$/bbl
• Near term Gasoil time spreads eased slightly lower yesterday after surging higher this week. The market remains vulnerable to supply disruptions without the sanction Russian supplies with a few refinery disruptions this week and with lower imports from the Persian Gulf.
• Diesel and gasoline crack spreads are edging higher after a drop in US gasoline and distillates stocks reported yesterday while implied demand also gained on the week.