Crude Weighs Demand Uncertainty with Tight Supplies

Crude is stable today after falling back by 2$/bbl yesterday but still on course for a net gain on the week ahead of the Brent Nov contract expiry today. Wider economic concerns with the possible US shutdown and future central bank policy and rate hikes create a more bearish demand outlook.

• Brent DEC 23 down 0% at 93.08$/bbl
• WTI NOV 23 up 0% at 91.72$/bbl
• Gasoil OCT 23 up 0.1% at 996.25$/mt
• WTI-Brent up 0.01$/bbl at -3.33$/bbl
• Support comes from the ongoing drawdown in global inventories and supply tightness from OPEC+ cuts. Some analysts highlight the risk of extended cuts into next year but others suggest Saudi Arabia might want to ease cuts after the strong price rally this quarter. The next OPEC+ JMMC monitoring committee meeting takes place next week.
• Optimism of a demand boost from the upcoming China Golden Week holiday period is also supportive while official China PMIs for September are due tomorrow.
  • Brent DEC 23-JAN 24 down -0.12$/bbl at 1.8$/bbl
  • Brent DEC 23-DEC 24 down -0.45$/bbl at 9.78$/bbl
• The WTI-Brent spread has eased back from a high of -2.54$/bbl but the low Cushing stocks are still supportive. Backwardation also softened slightly yesterday with the prompt spread today down to 1.8$/bbl and Dec23-Dec24 at 9.8$/bbl.
• Diesel cracks have recovered from a low earlier in the week with a boost to demand while inventories remain low despite the small builds this week while supply is squeezed by Russia’s export ban. Gasoline cracks continue to trend lower on weak demand after the end of the peak summer season.
  • US gasoline crack down -0.2$/bbl at 11.96$/bbl
  • US ULSD crack up 0.4$/bbl at 46.53$/bbl