Crude Falls on Proposed US Oil Surtax

Oil fell back sharply after rallying earlier in the day on supply issues and tight markets.

• Brent AUG 22 up 0.2% at 121.39$/bbl
• WTI JUL 22 up 0.2% at 119.13$/bbl
• Gasoil JUL 22 down -0.5% at 1291$/mt
• WTI-Brent down -0.22$/bbl at -4.92$/bbl
• Brent fell from a peak of 125.1$/bbl and WTI of 123.6$/bbl after reports that US Democrats may consider a tax on excess profits for oil companies. Democratic Senator Ron Wyden plans to propose the 21% surtax on oil companies that record a profit margin of greater than 10%. It is understood that Biden has not ruled out the proposal.
• Libya output remains at only 100kbpd compared to the 1.2mbpd produced before the field closures. OPEC expects oil demand to remain unchanged from their previous forecast for this year but see demand growth halving next year. Biden is due to travel to Saudi Arabia next month for discussions including energy production.
• Oil product markets remain strong with diesel crack spreads pushing back towards highs yesterday. EIA inventory data release later today is not expected to provide much relief from the high prices after the API data showed either stocks draws or just small builds. Crude time spreads maintain the weekly upward trend with no sign of easing for the tight market.
• Brent AUG 22-SEP 22 up 0.07$/bbl at 3.46$/bbl
• Brent DEC 22-DEC 23 up 0.3$/bbl at 14.77$/bbl