Crude Extends Losses on OPEC Supply Return and US Demand Concern

Crude futures and spreads are extending earlier declines as the market assesses the impact of the return of some OPEC supply from October counter to some analyst expectations. Front month Brent fell to the lowest since early Feb at $78.74/bbl and the prompt time spread is narrowing back towards parity at just $0.15/bbl.

• The OPEC+ producer group agreed to extend 2.2m voluntary production cuts into Q3 before returning some supply later this year but with OPEC cuts of 3.66mbpd extended until the end of 2025.
• The increase in supply this year is adding to the general trend for softer demand growth estimates and risk of higher for longer US rates.
• The US dollar also rose in reaction to the revision higher in the US S&P manufacturing data and added to the bearish crude move. Crude has seen a little recovery after the USD move reversed following the ISM manufacturing data missing expectations.
• Middle East negotiators are urging Israel and Hamas to agree to a ceasefire and hostage release deal outlined by U.S. President Joe Biden on Friday, but Israel said there will be no formal end to the war while Hamas retains power.
  • Brent AUG 24 down 1.9% at 79.59$/bbl
  • WTI JUL 24 down 2.2% at 75.31$/bbl
  • Brent AUG 24-SEP 24 down 0.08$/bbl at 0.16$/bbl
  • Brent DEC 24-DEC 25 down 0.5$/bbl at 3.08$/bbl