Crude Rallies on Possible Extension to OPEC+ Cuts

Crude is edging higher to extend the gains from yesterday with support from expectations for OPEC+ cuts continuing into October. Russia yesterday announced it has agreed on further actions with OPEC+ and will announce the steps next week. Saudi Arabia is soon expected to announce an extension of its 1mbpd voluntary output reduction into October.

• Brent NOV 23 up 0.3% at 87.09$/bbl
• WTI OCT 23 up 0.2% at 83.82$/bbl
• Gasoil SEP 23 up 2.6% at 918.5$/mt
• WTI-Brent down -0.68$/bbl at -3.95$/bbl
• Better China related asset sentiment is also helping support crude with efforts to improve housing demand in focus as the country looks to stimulate the economy. Data over the past two days has showed manufacturing PMIs in China have beaten expectations.
• A total of 12m tons of gasoline, diesel and jet fuel have been released in the third batch of Chinese export quotas for refined products, above the previous market expectation of 10m tons.
• The market awaits US payrolls data later today for further signs of future US Fed policy.
  • Brent NOV 23-DEC 23 up 0.02$/bbl at 0.62$/bbl
  • Brent DEC 23-DEC 24 up 0.08$/bbl at 5.73$/bbl
• Curve backwardation is strengthening an extension of OPEC+ supply cuts expected to put more pressure on declining global inventories in the second half of this year. The Dec23-Dec24 spread is trading at the highest since April while the near term 1-2 time spread has also seen a strong rally this week.
• Diesel crack spreads have recovered from lows seen yesterday but are still heading for a net decline on the week with easing fears for near term refinery disruptions weighed with ongoing low global inventories.
  • US gasoline crack up 0.6$/bbl at 24.66$/bbl
  • US ULSD crack up 0.7$/bbl at 48.02$/bbl