Crude Maintains Strength Amid Supply Risks Before CPI Data

Crude markets maintain the recent strength with supply risks from rising tensions in the Black Sea adding to the production cuts from Saudi and Russia that has driven the rally since the start of July amid ongoing economic uncertainties.

• Brent OCT 23 down 0% at 87.53$/bbl
• WTI SEP 23 down -0.1% at 84.35$/bbl
• Gasoil SEP 23 up 1.7% at 939.5$/mt
• WTI-Brent up 0.01$/bbl at -3.87$/bbl
• Softer China import data at the start of the week added some downside pressure while as the market looks to further indication for US Fed plans from the US CPI data today. US CPI is expected to soften and could help firm market expectations that the Fed’s hiking cycle is over.
• EIA data yesterday showed a build in crude inventories with an increase in production and despite a large drop in crude exports and increase in refinery runs. Production increased up to 12.6mbpd after spending the year so far between 12.2mbpd and 12.4mbpd. Net imports of crude oil rose last week to the highest since January 2022.
• EIA revised up its 2H23 Brent forecast to average $86/bbl, up by $7/bbl from last month according to the STEO report with the updated OPEC Monthly Oil Report due out later today.
  • Brent OCT 23-NOV 23 up 0.03$/bbl at 0.66$/bbl
  • Brent DEC 23-DEC 24 up 0.03$/bbl at 5.34$/bbl
• Near term time spreads have spiked higher in recent days on the increasing supply risks while longer dated spreads are also rallying although moves have been more muted. Brent Oct-Nov is up to the peak seen in April while Dec23-Dec24 has edged above the high from last week.
• Diesel and gasoline cracks have rallied post EIA data showing falling stocks and recovering implied demand. Gasoline implied demand showed a recovery after the trend lower in recent weeks. Distillates four-week average demand gained ground despite a small decline on the week. Diesel cracks are the highest since early Jan amid tight supplies and low stocks while gasoline as recovered some of the decline seen last week.
  • US gasoline crack down -0.2$/bbl at 38.76$/bbl
  • US ULSD crack up 0.3$/bbl at 50.95$/bbl