Crude Still in Strong Backwardation Despite Drifting Lower After Fed

Crude has traded lower after the US Fed signalled that at least one more interest rate hike is possible this year amid ongoing concern for inflationary pressures, not helped by the recent rising oil prices. The decline comes despite the US Fed as expected leaving the benchmark rate unchanged at the meeting yesterday.

• Brent NOV 23 down -0.8% at 92.76$/bbl
• WTI NOV 23 down -0.8% at 88.9$/bbl
• Gasoil OCT 23 down -0.2% at 961.75$/mt
• WTI-Brent up 0.04$/bbl at -3.86$/bbl
• Despite the price pull back the market remains over 10$/bbl higher than the low in August with support from OPEC+ cuts and demand optimism for US and China leading to a drawdown in global inventories.
• EIA yesterday showed a crude stock draw largely in line with expectation driven by a recovery in exports back above 5mbpd, lower imports and despite a drop in refinery runs. Cushing stocks again declined to the lowest since July 2022 with concern that the levels are approaching the minimum operation levels for the facility.
  • Brent NOV 23-DEC 23 unchanged at 1.18$/bbl
  • Brent DEC 23-DEC 24 down -0.28$/bbl at 8.56$/bbl
• Crude time spreads softened slightly yesterday but the curve remains in strong backwardation with the prompt Brent spread at 1.2$/bbl and Dec23-Dec24 still up at 8.5$/bbl.
• Diesel markets yesterday found some support from a recovery in distillates demand above the five year average in the EIA weekly petroleum data which added to an unexpected stocks draw. Gasoline demand drifted lower due to the weaker end of summer demand as EIA data showed the four week average fell to the lowest since March and still near the five year seasonal low.
  • EU Gasoline-Brent up 0.1$/bbl at 15.33$/bbl
  • EU Gasoil-Brent up 0.3$/bbl at 32.27$/bbl