Mid-Day Oil Summary: Crude Ticks Lower

Oil is edging lower today balancing Middle East concerns against a range of economic figures such as European demand worries. Crude is still holding the premium priced in on the first trading day following the Hamas attack in Israel, having come off as fears of a spillover into the likes of Iran eases. Today’s EIA data is expected to show a small draw in crude inventories.

• Brent DEC 23 down -0.1% at 87.95$/bbl
• WTI DEC 23 down -0.3% at 83.5$/bbl
• Gasoil NOV 23 down -0.7% at 875.25$/mt
• WTI-Brent down -0.07$/bbl at -4.45$/bbl
• API data: Crude: -2.668M, Cushing: +0.513M, Gasoline: -4.169M, Distillates: -2.313M
• Crude inventories in the ARA region rose 80k bbl in the week ending 20 October to 51.2m bbl, with stocks well below the five-year average, Genscape data show.
• The EIA weekly petroleum inventory data is due for release this afternoon at 15:30BST. EIA is expected to show a small draw in crude as well as gasoline and distillates stocks, with refinery utilization ticking slightly higher according to a Bloomberg survey.
• Measures are ongoing to try and de-escalate the Middle East situation such as hostage negotiations which are limiting a ground offensive at present as well as limiting Hezbollah retaliation from Lebanon with its links to oil producing Iran.
• The US will likely tighten sanctions on Iranian crude in response to the Israel conflict according to RBC’s Helima Croft in a CNBC interview.
• US President Biden met with Saudi’s Crown Prince Mohamed bin Salman Tuesday to help prevent the Israel-Hamas conflict from widening whilst indicating growing ties between the US and Saudi, which have largely been strained under Biden’s presidency after a request to the kingdom to produce more oil last year was snubbed.
• Iraqi PM Mohammed Shia Al-Sudani said Tuesday that foreign oil companies operating in the Kurdish region had informed him they can resume production within a month if an agreement is reached on oil production costs and contracts.
• China intends to cap its crude oil processing capacity at 1 billion metric tons by 2025 according to the country’s state planning agency. At 243mn tons for 2024, China keeps the crude import quota for private refiners unchanged for a fourth consecutive year.
• Gasoline cracks continue to edge back higher since mid-October despite weak demand persisting. Diesel spreads are holding at healthy levels driven by low stocks and tight supplies amid refinery outages ahead of the winter heating season. EIA data today are expected to show a draw of -0.722mbbls in gasoline stocks.
  • US gasoline crack up 0.3$/bbl at 11.49$/bbl
  • US ULSD crack down -0.8$/bbl at 39.9$/bbl
• Russian fuel exports fell to 2.1mn bpd in the first three weeks of October according to Vortexa figures – 8% down on September and the lowest since July 2020.
• As of October 23, total oil product stocks in Fujairah were reported at 16.810 mn bbls - a drop of 1.699 mn bbls or 9.2% w/w.