Mid-Day Oil Summary: Brent Nears 90$/bbl

Middle East escalations are pushing oil Friday as Brent nears the $90/bbl level. The US struck Iranian targets in Syria yesterday stoking fears of rising conflict involving Iran and potentially impacting its oil supply – a key counter against OPEC+ cuts in the second half of this year. Front month crude is on track for a weekly net decline, as market focus shifted to weaker economic demand.

• Brent DEC 23 up 2.1% at 89.82$/bbl
• WTI DEC 23 up 2.1% at 84.99$/bbl
• Gasoil NOV 23 up 1.1% at 898$/mt
• WTI-Brent down -0.04$/bbl at -4.82$/bbl
• Iran's Foreign Minster Hossein Amirabdollahian warned at the UN on Thursday that if Israel's retaliation against Palestinian militants Hamas in the Gaza Strip doesn't end then the US will "not be spared from this fire." - stoking tensions ahead of the latest strikes.
• Physical crude markets have been more reflective of underlying economic weakness, a factor adding as another drag on oil at present, with signs of weak economic demand such as poor refined fuel demand figures in Europe and crude stockpile builds in the US. Physical barrels of sweeter grades like WTI are also being impacted by its high gasoline yield.
• Despite the gain Friday, WTI and Brent are on track to post their first weekly drop in three weeks with no actual impact to oil supply because of Middle East tension yet with the main concerns pointed at Iranian barrels which are leaving at a sanctioned record pace this year – mainly to China.
• About 250kbpd of Venezuelan crude, currently going to Asia could be diverted to the US Gulf following last week’s sanctions easing according to Valero’s COO Gary Simmons Thursday.
• An ExxonMobil led consortium have made another significant discovery offshore Guyana. The Lancetfish-2 well marks the fourth offshore discovery in the country this year, the firm said.
• Kazakhstan could boost oil exports to Germany to 2mn t/yr, from 1.2mn t/yr vi the Druzhba pipeline, the Kazakh Energy Minister Almasadam Satkaliyev said, cited by Interfax.
• Some oil tankers are achieving over $100,000/day in Europe according to Baltic Exchange data reported by Bloomberg, surging to the highest levels since late 2022. The move is driven by ships travelling longer distances and a risk premium added because of Middle East escalations.
• Overall weaker gasoline crack prices in the US are filtering through to the pump as the US average crosses the $3.49/gal mark this week. US gasoline demand remains lackluster on a seasonal basis.
• Valero plans to run its 14 US refineries at 96.5% in Q4 it said yesterday, up from 95% in Q3 – a more bullish signal despite signs of economic malaise. The company noted significant exports to Latin America.
• US gasoline crack down -0.1$/bbl at 10.82$/bbl
• US ULSD crack up 0.2$/bbl at 41.08$/bbl
• Russia sent record volumes of seaborne fuel oil and vacuum gasoil to India las month, totalling 1.4mn tons, up from 0.6mn tons in August, LSEG data and Reuters calculation showed.
• QatarEnergy has offered additional gasoil cargoes for loading in 2024, according to Reuters sources. QatarEnergy is looking to sell at least 324k bbl of gasoil per month from December 2023 to March 2024
• BP’s Gelsenkirchen refinery in Germany is planning to restart a crude unit this weekend after it was halted in mid-September, a person familiar with the matter said, cited by Bloomberg.