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OIL: Brent Recovers with Focus on Hurricane Impact Ahead of US Data

OIL

Brent front month has recovered some ground since falling to a low of $68.68/bbl with the bearish theme driven by market concerns for a surplus after downward revisions to OPEC’s global demand growth forecasts and soft China imports.

  • OPEC yesterday revised oil demand growth forecasts very slightly lower for this year and next but the forecast for 2024 remains well above other market expectations at 2.03mb/d.
  • The EIA however raised its forecast for global oil demand in 2024 to 103.08m b/d. EIA expects Brent to return to above $80/bbl in Q4 and average around $84/bbl in 2025.
  • Hurricane Francine is due to make landfall today in Louisiana and may impact eight refining facilities along the coast.Energy companies shut-in about 24% of the Gulf’s production at 412kbpd and evacuated staff from 130 production platforms, said the Bureau of Safety and Environmental Enforcement.
  • US crude inventories are expected to show a small build today after the net draws since June in EIA data released today. API data however showed a continuation of the crude draws falling by 2.79mbbl, according to Bloomberg. Gasoline fell 0.51mbbl and distillate rose 0.19mbbl.
  • Later the focus will be on US August CPI, which is expected to show headline easing to 2.5% y/y with core stable at 3.2%.
  • US diesel cracks are drifting back towards the lows of last week with weak demand and healthy supply weighing on prices despite upcoming refinery maintenance and hurricane risks.
    • Brent NOV 24 up 1.3% at 70.09$/bbl
    • WTI OCT 24 up 1.3% at 66.62$/bbl
    • Brent NOV 24-DEC 24 up 0.01$/bbl at 0.37$/bbl
    • Brent DEC 24-DEC 25 up 0.18$/bbl at 0.98$/bbl
    • US gasoline crack down 0$/bbl at 12.86$/bbl
    • US ULSD crack down 0.1$/bbl at 20.54$/bbl

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