Mid-Day Oil Summary: Crude Edges Higher

Crude prices recouped some earlier losses and edge higher as Saudi Arabia is expected to roll over its output cuts into October, while markets await US payroll data. Upside is limited following the release of the China PMI.

• Brent OCT 23 up 0.7% at 86.5$/bbl
• WTI OCT 23 up 0.7% at 82.2$/bbl
• China Update: China’s PMI rose to 49.7 from 49.3 in July, according to the National Bureau of Statistics, staying below the 50-point level separating contraction from expansion. China’s manufacturing activity contracted for a fifth consecutive month and adding to fears around a sluggish recovery for the economic powerhouse against a backdrop of fairly limited stimulus measures so far.
• There have been concerns about Hurricane Idalia which has barreled through the rich oil and gas producing Gulf of Mexico. Kinder Morgan said Wednesday its Port Manatee, Port Sutton and Tampaplex terminals in Florida sustained minimal damage.
• The North Sea combined BFOET exports are set to fall to 565kbpd in October compared with 607kbpd in September.
• Indian crude oil imports from Russia declined for the third consecutive month in August to 1.57mbpd, down by 24% month on month.
• Russian Deputy Prime Minister Alexander Novak said the country plans to cut oil exports in September by 300kbpd against June. Russia is discussing with its OPEC+ partners the possibility of extending oil-export cuts into October.
• TotalEnergies on Wednesday halted a unit at its 249kbpd Gonfreville refinery complex in Normandy as the unit had a temporary disruption according to a community alert.
• Diesel crack spreads are edging lower again today after the pull back yesterday driven by limited disruption from hurricane Idalia and the fire last week at the Garyville refinery. The front month US diesel crack has fallen from a high of about 58$/bbl on 25 Aug back to levels last seen in mid Aug of 46.2$/bbl according to Bloomberg data.
• The Gasoil time spreads has also eased lower with the reducing supply risks with Dec23-Dec24 down from 100$/bbl to 75.5$/bbl. Curve backwardation however remains strong with supplies tight heading into the winter heating season and with global stocks still low.
• Russian exports of refined oil products are expected to plummet to a 10 month low in August due to planned maintenance at refineries.
• The third batch of Chinese export quotas for refined products are to be released soon, according to OilChem. OilChem estimates that 12m mt will be released, pushing up the total quotas to 39.9m mt for 2023. This would be a rise of 2.75m mt on the previous year. China’s refined fuel demand in H2 2023 is expected to increase by 10% compared to H2 2022, the President of PetroChina Huang Yongzhang said on Thursday.
• Gasoil SEP 23 up 0.4% at 898.75$/mt
• EU Gasoil-Brent down -0.4$/bbl at 32.46$/bbl
• Gasoil SEP 23-OCT 23 down -1$/mt at 12.5$/mt
• Gasoil DEC 23-DEC 24 up 1.75$/mt at 76.75$/mt
• US gasoline crack up 0.8$/bbl at 27.01$/bbl