Crude Holds Steady After Rally on Saudi and Russia Cuts

Crude markets remain strong today despite easing back from the highs of just over 91$/bbl yesterday after Saudi Arabia and Russia both extended cuts beyond September. Saudi extended the 1mbpd voluntary production cuts and Russia extended the 300kbpd export cut for three months until the end of the year.

• Brent NOV 23 down -0.1% at 89.93$/bbl
• WTI OCT 23 down -0.2% at 86.56$/bbl
• Gasoil SEP 23 up 0.1% at 952.25$/mt
• WTI-Brent down -0.02$/bbl at -4.04$/bbl
• The cuts exceeded markets expectations as both nations were expected to announce further curtailment to output and exports into October only. Both countries will review monthly to consider deepening cuts or raising output depending on market conditions.
• Russian seaborne oil exports fell to an 11-month low in August as heavy refining maintenance hit oil product exports and pledged output cuts and Black Sea tension limit crude flows according to S&P Global.
  • Brent NOV 23-DEC 23 down -0.01$/bbl at 0.68$/bbl
  • Brent DEC 23-DEC 24 up 0.02$/bbl at 6.87$/bbl
• Crude time spreads also eased back after the initial spike higher following the announcement of the extended OPEC+ cuts on the expectation of inventory drawdowns and tighter supplies. The prompt Brent spread has lost most of the gains following the news but remains significantly higher than levels seen in mid to late August.
  • US gasoline crack up 0.3$/bbl at 22.21$/bbl
  • US ULSD crack down -0.2$/bbl at 48.5$/bbl
• Gasoline and diesel crack spreads are seeing some support this week after gradually drifting lower over the previous week. The US front month gasoline crack is down from a high of nearly 31.3$/bbl on 25 August to 22.2$/bbl. Gasoline market support comes from low inventories and steady demand at the end of the summer driving season. The upcoming refinery maintenance period in US in Sep and Oct could limit crude demand but won’t help to boost product stocks.