Crude Drifts Lower with Demand in China Back in Focus

Crude pulls back from highs seen last week as market focus turns to oil demand growth in China with concern for a worsening property sector ahead of official data released this week. Recent US dollar strength is also adding downside pressure to limit the upside gains driven by tight market supply concerns and some forecast that the US will avoid a recession.

• Brent OCT 23 down -1.2% at 85.78$/bbl
• WTI SEP 23 down -1.2% at 82.16$/bbl
• Gasoil SEP 23 down -2.2% at 896.5$/mt
• WTI-Brent down -0.06$/bbl at -4.23$/bbl
• IEA last week revised up its global oil demand forecast for this year to 10.2mbpd, up from 102.1mbpd in July, boosted by strong summer air travel, increased oil use in power generation and surging Chinese petrochemical activity. OPEC had earlier last week kept its global oil demand forecast stable at 102mbpd but showed a supply deficit of more than 2mbpd in Q3.
  • Brent OCT 23-NOV 23 down -0.04$/bbl at 0.63$/bbl
  • Brent DEC 23-DEC 24 down -0.28$/bbl at 4.9$/bbl
• OPEC+ supply cuts are supporting strong crude curve backwardation with prompt time spreads holding just below the highest since November seen mid last week. The longer dated Dec23-Dec24 spreads are following the pull back in front month crude. The WTI-Brent spread is also falling back to -4.23$/bbl having closed in to less than -3.8$/bbl early last week.
  • US gasoline crack up 0$/bbl at 40.69$/bbl
  • US ULSD crack down -0.7$/bbl at 47.05$/bbl
• Diesel markets are softer today with crack spreads pulling back from the highest since January with demand concerns limiting upside despite ongoing tight supplies and low global inventories. IEA last week said OECD European crude processing is expected to decline 600kbpd y/y in Q3. Gasoline crack spreads are holding steady today after edging higher last week with a slight recovery in demand in data last week.