Mid-Day Oil Summary: Crude Eases Back

Crude markets reversed earlier gains and are trading lower on the day after another drop in Cushing stocks in EIA data yesterday added to existing tight supply concerns as crude nears 100$/bbl. Upside has been limited by a stronger US dollar and concern for the impact on demand from future central bank policy.

• Brent NOV 23 down -0.3% at 96.26$/bbl
• WTI NOV 23 down -0.2% at 93.52$/bbl
• WTI-Brent up 0.09$/bbl at -2.71$/bbl
• Crude inventories at Cushing fell for the seventh week with a draw of 943k this week taking stocks to the lowest since July 2022 at 21.96mbbls and close to operational low, below which oil is difficult to remove. The low stocks are supporting WTI with the WTI-Brent rallying to a high of -2.65$/bbl overnight while crude backwardation also strengthened.
• Russia is selling oil to India at almost $80/bbl, well above the G7 price cap of $60/bbl, traders said.
• Saudi Arabia supplied surprisingly high crude volumes to their buyers in the month of August, drawing down seaborne inventories (floating storage and in-transit volumes) by 1.5mbd on average.
• Bulgarian lawmakers are voted Thursday on to end imports of Russian crude from October 2024.
• The Chinese government will not issue new quotas for clean oil product exports or additional crude imports this year according to three Platts sources.
• Chinese refining combined crude throughput is likely to hit a record high in September.
• Chinese traffic has been rising since the beginning of August and the country’s congestion saw another climb last week by 11.3% week on week in the seven days up to 27 September, the highest level in two years.
• Global road-diesel and jet fuel demand has been lifted by strong Chinese trucking activity and a pick-up in international travel ahead of the Golden Week holiday according to JPMorgan.
• Gasoline cracks have fallen with further weakness in demand driving an unexpected stock build in EIA data yesterday.
• Diesel cracks recovered from a low earlier in the day yesterday with a boost to demand while inventories remain low despite the small build this week while supply is squeezed by Russia’s export ban. Russian Energy Minister Nikolai Shulginov said earlier Thursday that the fuel export ban will not be lifted soon and will remain in place until the domestic market stabilizes.
• Europe is pulling in higher diesel volumes in September mainly due to increased shipments from India and Saudi Arabia. Arrivals in the European Union and the UK are likely to reach 1.1mbpd – 14% higher than August.
• Exxon’s 564kb/d Baytown refinery is starting a turnaround on the biggest of three crude units this week as part of maintenance on several units over the next several weeks.
• US gasoline crack down -0.6$/bbl at 12.78$/bbl
• US ULSD crack up 0.9$/bbl at 44.06$/bbl