Mid-Day Oil Summary: Crude Rises

Crude is trading higher today having traded between about 92.2$/bbl and 94.5$/bbl yesterday. The downside pressure from the US Fed suggestion of another possible rate hike this year was countered by a rally in diesel markets in response to a temporary halt to Russian gasoline and diesel exports.

• Brent NOV 23 up 0.8% at 94$/bbl
• WTI NOV 23 up 1% at 90.49$/bbl
• The Russian government has introduced a temporary ban on the export of gasoline and diesel fuel effective immediately to stabilize the domestic market ahead of peak refinery maintenance.
• Russia gasoline/diesel ban is likely to last 6-week according to Citi analysts. The bank said a prolonged ban of these fuels would not be in Russia’s interests and it could end up shutting in crude production. They added that Russia’s limited refined product storage could force refineries to trim operations and force crude production lower in winter. Citi added that domestic diesel demand for harvest is set to peak in the next 3-5 weeks before slowing in November.
• JP Morgan expects the ban to last a “couple of weeks, until harvest concludes in October.”
• According to industry consultant FGE, “Once domestic supplies are replenished, Russia will have to resume exports due to a lack of spare storage capacity.” At the latest, Russian diesel exports are expected to resume in two weeks, possibly earlier, FGE said.
• Diesel markets have steadied after the initial surge higher yesterday on the reports of the ban on Russian diesel and gasoline exports. The European Gasoil-Brent spread is today holding steady at 34.5$/bbl but below the peak of just over 37$/bbl yesterday. The risk of tight global supplies has helped maintain the strong curve backwardation.
• Gasoil OCT 23 down -0.9% at 998$/mt
• ULSD OCT 23 up 1.4% at 3.42$/gal
• Gasoil OCT 23-NOV 23 down -0.5$/mt at 34.75$/mt
• Gasoil DEC 23-DEC 24 down -6$/mt at 118$/mt
• EU Gasoil-Brent up 0.8$/bbl at 35.28$/bbl
• US ULSD crack up 0.9$/bbl at 49.5$/bbl
• Russian wholesale gasoline and diesel prices are tumbling Friday after the ban on exports of the grades from the country. Prices for Russia's wholesale gasoline Ai-92 grade fell by 9.7% on the St. Petersburg International Mercantile Exchange (SPIMEX) on Friday. Diesel prices were down by 7.5%.
• The US Coordinator for the Middle East and North Africa Brett McGurk and Senior Advisor to the President for Energy and Investment Amos Hochstein emphasized the urgency of reopening the Iraq-Turkey pipeline as soon as possible, according to a White House e-mailed statement.
• Onshore crude inventories in China had been drawn down over the past three weeks to the lowest since mid-June according to data tracked by satellite firm Ursa Space Systems.