Crude Drifts Lower On Demand Concern and Supply Optimism

Crude is drifting lower amid global demand concerns and supply optimism after regaining some of the earlier losses yesterday after the latest EIA data. Current weakness is due to economic concerns in US and China combined with high flows out of Iran, optimism around a return of Iraqi flows via Turkey and the possible temporary lifting of US sanctions against Venezuela.

• Brent OCT 23 down -0.5% at 82.83$/bbl
• WTI OCT 23 down -0.5% at 78.48$/bbl
• Gasoil SEP 23 down -1% at 903.5$/mt
• WTI-Brent unchanged at -4.34$/bbl
• EIA data yesterday showed a slightly larger than expected draw in crude inventories taking total stocks down to the lowest since December.
• Upside is limited by concern for inflation as the market looks to the Jackson Hole economic symposium for signs of future Fed policy and a potential extension to the US rate tightening cycle.
• US officials are drafting a proposal to ease sanctions on Venezuela allowing more companies and countries to import its crude oil if the South American nation moves toward a free and fair presidential election.
  • Brent OCT 23-NOV 23 down -0.03$/bbl at 0.34$/bbl
  • Brent DEC 23-DEC 24 down -0.03$/bbl at 3.7$/bbl
• Near term Brent time spreads regained ground yesterday following the EIA data release but curve backwardation is still softer on the week amid the easing tight supply concern.
• Diesel and gasoline markets again edged higher yesterday with low stocks supporting prices despite the small gains in US inventories seen in the data this week. The US front diesel spread yesterday traded up to the highest since January at around 52.5€/MWh.
  • US gasoline crack up 0.2$/bbl at 29.16$/bbl
  • US ULSD crack down -0.2$/bbl at 51$/bbl