Mid-Day Oil Summary: Crude Eases Back

Crude is easing back to the lowest level since 14 September 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 -1% at 92.61$/bbl
• WTI NOV 23 down -1% at 88.8$/bbl
• Gasoil OCT 23 up 0.8% at 971.25$/mt
• Despite the price pull back the market remains over 10$/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.
• Morgan Stanley has raised its Q4 Brent forecast to $95/b, up from $82.5/b, although it remains sceptical that prices could surpass $100/b.
• Speaking to Fox News overnight, Saudi Crown Prince Mohammed bin Salman stated that OPEC+ oil production cuts were based on market stability: “If there is shortage of supply our role in OPEC+ is to fill that shortage. If there is oversupply our role of OPEC+ is to measure that for the stability of the market.”
• The Brent crude premium to Dubai has rallied sharply this month, after a steep decline since last November. The Brent-Dubai EFS jumped to a high of $2.60-$2.70 a barrel, compared with an average of 90 cents in the first half of September.
• The Bank of England rate decision is due today at 12:00 BST with the majority of sell side analysts looking for a hike although with notable caveats to their calls post-inflation data.
• China imported record levels of Russian oil in August at 10.54mn tons, up from 8.06mn tons in July beating the prior record in June. Flows from Saudi also surged.
• Fields in Iraqi Kurdistan are raising production and selling into the local market, as output increases despite the ongoing northern pipeline closure.
• Diesel markets yesterday found some support from a recovery in distillates demand above the five year average in the EIA weekly petroleum data which added to an unexpected stocks draw. Gasoline demand drifted lower due to the weaker end of summer demand as EIA data showed the four week average fell to the lowest since March and still near the five year seasonal low.
• Russian seaborne diesel and gasoil exports on 1-20 September stood at around 1.7mn tons, down by almost 30% compared with the same period in August, LSEG data showed.
• EU Gasoline-Brent up 0.6$/bbl at 15.81$/bbl
• EU Gasoil-Brent up 1.6$/bbl at 33.55$/bbl