Mid-Day Oil Summary: Crude Continues Selloff

Crude is resuming the decline driven by economic concerns and possible future interest rate rises despite the ongoing tight supplies due to the OPEC cuts until year-end. A sharp sell-off in Brent futures yesterday resulted in a break of support of the 50-day EMA and levels are now at the psychological support level of around 85$/bbl for the first time since 28 August.

• Brent DEC 23 down -1.8% at 84.3$/bbl
• WTI NOV 23 down -1.9% at 82.62$/bbl
• BRENT TECHS: (Z3) Sharp Sell-Off
  • SUP 1: $85.00 - Round number support
  • SUP 2: $82.80 - 50.0% retracement of the May 4 - Sep 28 bull run
  • SUP 3: $81.33 - Low Aug 24
• The Turkey-Iraq oil pipeline has been “ready to operate” as of Wednesday according to Turkish Energy Minister Alparslan Bayraktar. The minister added the resumption of flows is depending on Iraq. But Iraq is not resuming crude exports to Turkey via pipeline with issues surrounding compensation still needing to be resolved according to an Iraqi oil ministry official.
• North Sea medium grades – including Gullfaks, Ekofisk, Grane, Troll, Alvheim are being offered at strong premiums to Dated according to traders speaking to Bloomberg.
• The Petroineos Lavera refinery France is halting some units for planned maintenance based on a community alert but no further specifics have been given.
• Diesel markets are seeing further downward pressure today amid speculation that the Russian fuel export ban could be eased soon after Novak comments yesterday that Russian market is well supplied now. Front month Gasoil has fallen from over 1000$/mt to 880$/mt so far this month and the lowest since the start of August.
• Russian exports of diesel and gasoline will be banned as long as necessary, Kremlin spokesman Dmitry Peskov said as reported by TASS. Following a meeting with oil companies, Russian PM Alexander Novak said that the domestic fuel market was in balance and being provided with the volumes it requires.
• The wider oil market correction has added to the bearish pressure ahead of the US payroll data due tomorrow, with economic concerns and potential future central bank rate hikes limiting demand growth expectations.
• The US front month diesel crack has fallen from about 48.9$/bbl on 2 Sep to 40.3$/bbl today.
• Gasoil backwardation is also softening with the prompt time spread and Dec23-Dec24 spread down to the lowest in about a month.
  • Gasoil OCT 23 down -5.2% at 871.75$/mt
  • ULSD NOV 23 down -3% at 2.93$/gal
  • Gasoil OCT 23-NOV 23 down -4$/mt at 21.5$/mt
  • Gasoil DEC 23-DEC 24 down -15.5$/mt at 76.25$/mt
  • EU Gasoil-Brent down -1.4$/bbl at 26.37$/bbl
  • US ULSD crack down -2.1$/bbl at 40.41$/bbl