Crude Lower on China Demand Concerns and Hope for Iranian Supply

Crude drifts lower with ongoing economic concerns, due to a stronger dollar and with hope for an agreement to EU proposals to revive the Iranian nuclear deal.

• Iranian Foreign Minister Spokesman Kanaani this morning said that basis existing for a nuclear deal “in the very near future” if Iran gets guarantees. Some of their expectations have been met but not fully.
• In China a central bank rate cut and weaker than expected activity data for July have added to concerns for oil demand recovery.
  • Brent OCT 22 down -0.9% at 97.25$/bbl
  • WTI SEP 22 down -1% at 91.2$/bbl
  • Gasoil SEP 22 down -1.5% at 1029.75$/mt
  • WTI-Brent up 0.03$/bbl at -6.69$/bbl
• Crude backwardation has stabilised in recent days with time spreads having fallen significantly over the previous month. Over the weekend Saudi Aramco said they would have no trouble increasing production to 12mbpd if asked to by the Saudi government and that they are working to increase sustainable capacity to 13mbpd by 2027.
  • Brent OCT 22-NOV 22 down -0.07$/bbl at 1.18$/bbl
  • Brent DEC 22-DEC 23 down -0.26$/bbl at 7.68$/bbl
• Demand concerns are also feeding into gasoline and diesel crack spreads which are slightly softer today having rallied last week.
  • US gasoline crack down -0.4$/bbl at 35.7$/bbl
  • US ULSD crack down -0.5$/bbl at 55.03$/bbl