Mid-Day Oil Summary: Crude Rallies on China Data, Middle East Tensions

Oil prices are extending gains throughout the session to the highest since 2 October after Iran’s Foreign Minister calls for an oil embargo against Israel. Prices already rallied overnight after stronger than expected Q3 GDP data domestic data and record crude processing rates in China and an escalation in the conflict in Israel.

• Brent DEC 23 up 2.8% at 92.43$/bbl
• WTI NOV 23 up 2.9% at 89.2$/bbl
• The Iranian Foreign Minister Hossein Amirabdollahian calls for a “full and immediate boycott” of Israel by Muslim countries, the expulsion of Israeli ambassadors and an oil embargo against Israel, according to statement by ministry on Telegram. Concern for an escalation in the conflict in Israel has increased after the Jordan leg of US President Biden’s trip was cancelled due to an explosion at a Gaza hospital. Any involvement by Iran, either leading to further sanctions or retaliatory blocks on flows via the Strait of Hormuz, could see a further squeeze on supply in an already tight market. OPEC+ plans no extraordinary meeting or immediate action after Iran’s foreign minister called for an Israeli oil embargo, OPEC sources said.
• China refinery throughput hit another record in September at 63.62 million metric tons last month or 15.48mn bpd, up from the prior record in August of 15.23mn bpd according to National Bureau of Statistics (NBS) data.
• Some downside pressure has this week been provided by hope for supplies from Venezuela. Maduro government agreed to electoral guarantees for its political opposition in the 2024 presidential election Tuesday – opening the door for possible US sanctions relief for its oil. The deal did not however lift bans on opposition candidates barred from public office as expected prior to the meeting in Barbados yesterday.
• API weekly oil stock data: Crude -4.38mbbl, Cushing -1.005mbbl, Gasoline -1.578mbbl, Distillate -0.612mbbl. The EIA weekly petroleum inventory data is due for release this afternoon at 15:30BST.
• Crude inventories in the ARA region declined by 217kbpd in the week ending 13 October to 51.2mn barrels, Genscape data showed.
• Russian President Putin arrived in China Tuesday where he is hosted by Chinese President Xi Jinping.
• Iraq’s crude oil production in September edged slightly higher to 4.73mbpd, up from 4.71mbpd in August according to according to the Iraq Oil Report.
• China’s commercial crude oil storage utilization rates stood at 58.47% in the week to Oct. 18, according to OilChem.
• ExxonMobil is planning to restart a coker at its 522.5kbpd Baton Rouge refinery in Louisiana as early as 28 October, two people familiar with plant operation said, cited by Reuters.
• Diesel cracks are slightly softer and gasoline crack spreads are holding steady after China data showed record refinery runs in September but a drop in China gasoline and diesel exports on the month. The US front month gasoline crack has been holding between 7.3$/bbl and 10.7$/bbl after trending lower in the previous seven weeks from a high of around 40.7$/bbl in mid August due to weak demand. Diesel cracks have seen some support in the last week amid Middle East concerns while supplies remain tight during the current refinery maintenance season and global inventories are still below normal.
  • EU Gasoil-Brent down -1.2$/bbl at 27.66$/bbl
  • US ULSD crack down -0.9$/bbl at 44.58$/bbl
  • EU Gasoline-Brent up 0.1$/bbl at 4.28$/bbl
  • US gasoline crack down -0.3$/bbl at 8.61$/bbl
• MNI Commodity Analysis: https://enews.marketnews.com/ct/x/pjJscQDcxO4I6ag0Ik9xSA~k1zZ8KXr-kA8x6nHDsWmptIPjO1OcQ