Crude Maintains Rally With Expected Q4 Deficit

The crude remains in a bull rally to reach the highest since November at nearly 92.4$/bbl after seeing a steady gain from a low of 82.4$/bbl on 24 August. The key driver is still the tight supplies and the drawdown in global inventories with support from demand optimism from US and strong China crude imports.

• Brent NOV 23 up 0.1% at 92.18$/bbl
• WTI OCT 23 up 0.2% at 89.01$/bbl
• Gasoil OCT 23 down -0.6% at 970$/mt
• WTI-Brent up 0.03$/bbl at -3.89$/bbl
• The OPEC monthly report yesterday forecasts oil demand in 2023 rising by 2.4mbpd then dropping to 2.2mbpd in 2024, both unchanged from July's report. The data suggest a global oil market shortfall of more than 3mbpd in Q4 if the group maintains production at the current levels of 27.45mbpd.
• The EIA STEO report last night suggested a more modest 230kbpd deficit in Q4 with non OPEC production helping to boost global supplies. The updated IEA monthly oil report is due out later today.
• The potential for the US Fed to pause the recent rate hike cycle at the meeting next week remain in focus with the US CPI data due out later.
  • Brent NOV 23-DEC 23 up 0.03$/bbl at 0.76$/bbl
  • Brent DEC 23-DEC 24 up 0.11$/bbl at 8.02$/bbl
• Crude backwardation continues to strengthen reflecting the tight global oil supplies. The Dec23-Dec24 spread is trading at the highest since June 2022 and prompt spread regaining ground towards the high from last week.
• Strong oil product prices are also supportive on the wider oil market although prices saw a pull back yesterday despite the low stocks and refinery maintenance season. API data last night showed a boost to both gasoline and distillates inventories although stocks remain at historically low levels.
  • US gasoline crack down -0.3$/bbl at 24.91$/bbl
  • US ULSD crack down 0$/bbl at 50.97$/bbl