Mid-Day Oil Summary: Crude Trends Lower

Crude front month is edging down after surging higher at the start of the week amid concern for oil supplies amid the conflict in Israel. Limited impact is currently expected on oil flows but any expansion of tensions into Iran could risk supplies. Demand concerns due to the risk of higher for longer central bank rates are limiting upside.

• Brent DEC 23 down -0.6% at 87.12$/bbl
• WTI NOV 23 down -0.7% at 85.37$/bbl
• Gasoil OCT 23 up 0.1% at 901.5$/mt
• Reports of a new round of China stimulus to help the economy meet the government’s annual growth target has added some support.
• The Biden administration has not ruled out new sanctions against Iran in relation to the renewed conflict in the Middle East, but no decisions have been made yet, US Treasury Secretary Janet Yellen said.
• Mercuria’s deputy CEO Magid Shenouda said oil could hit $100/bbl if the Middle East situation escalates.
• ARA crude inventories rose 2mn bbls or 4.1% in the week ended October 6 to 51.4mn bbls according to Genscape.
• The day delayed API oil inventory data is due for release today at 16:30 ET ahead of the EIA weekly data tomorrow.
• OPEC+ crude oil production increased by 333kbpd in September to 40.85mbpd, amid higher output from Nigeria, Iran and Kazakhstan according to a Platts survey.
• Crude output cuts this year have boosted OPEC spread production capacity to the biggest in more than a decade except for during the covid driven demand decline. OPEC spare capacity will be more than 4mbpd this year and in 2024 and about 4% of global supplies according to the US EIA.
• Russia and Saudi Arabia will discuss oil markets and prices on Wednesday, Deputy Prime Minister Alexander Novak said, cited by Tass.
• Gasoline crack spreads are edging higher after small gains yesterday after the US spread fell to the lowest since April 2020 and down from over 40$/bbl in mid August to a low of nearly 7.4$/bbl yesterday. Refinery margins still support high refinery utilisation with relatively strong distillate demand and tight supplies offsetting the weak gasoline demand amid high US pump prices after the end of the peak summer season.
• China’s gasoline and gasoil prices are expected to see pressure from flatlining demand and bearish market sentiment, according to OilChem.
• Russian oil product exports fell in the first week of October – with diesel outflows at a three year low according to Bloomberg analysis of Vortexa data. Oil product exports dropped to ~2.3mbpd in the first week of October, down 91kbpd from the previous month.
  Russia is ready to increase petroleum product exports to Saudi Arabia according to Deputy PM Alexander Novak.
• US gasoline crack up 0.6$/bbl at 9.64$/bbl
• US ULSD crack down 0$/bbl at 40.96$/bbl