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OIL: Crude Drifts Lower Ahead of US Oil Inventories and Fed Rate Decision

OIL
BulletEnergy BulletsCommodities

Brent crude edges down from a high of $74.28/bbl yesterday with focus on US inventories and with potential for increased Middle East tensions ahead of a likely interest rate cut by the U.S. Federal Reserve. Support from near term supply disruptions in Libya and Kazakhstan is weighed with concerns over global demand for oil, especially from China.

  • Geopolitical developments in the Middle East are in focus following explosions in Lebanon, which Hezbollah is blaming on Israel.
  • Later the FOMC decision is announced and the revised dot plot released. Bloomberg consensus is forecasting a 25bp cut but there is significant speculation that the first move will be 50bp with the market pricing in 1.5 25bp moves.
  • US crude inventories are expected to show a small draw today as the market look for the impact from Hurricane Francine. API data however showed a crude build of 1.96mbbl, according to Bloomberg. Gasoline rose 2.34mbbl and distillate built 2.3mbbl.
  • The US is seeking up to 6mbbls of crude for the SPR for delivery in the first few months of 2024, a Reuters source said, with prices below the target buyback price.
  • Diesel and gasoline cracks rose yesterday with support from refinery maintenance and possible run cuts but remain under pressure due to weaker demand.
    • Brent NOV 24 down 0.7% at 73.17$/bbl
    • WTI OCT 24 down 0.7% at 70.68$/bbl
    • Brent NOV 24-DEC 24 down 0.02$/bbl at 0.67$/bbl
    • Brent DEC 24-DEC 25 down 0.14$/bbl at 1.62$/bbl
    • US gasoline crack down 0.1$/bbl at 12.51$/bbl
    • US ULSD crack down 0.2$/bbl at 18.76$/bbl
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Brent crude edges down from a high of $74.28/bbl yesterday with focus on US inventories and with potential for increased Middle East tensions ahead of a likely interest rate cut by the U.S. Federal Reserve. Support from near term supply disruptions in Libya and Kazakhstan is weighed with concerns over global demand for oil, especially from China.

  • Geopolitical developments in the Middle East are in focus following explosions in Lebanon, which Hezbollah is blaming on Israel.
  • Later the FOMC decision is announced and the revised dot plot released. Bloomberg consensus is forecasting a 25bp cut but there is significant speculation that the first move will be 50bp with the market pricing in 1.5 25bp moves.
  • US crude inventories are expected to show a small draw today as the market look for the impact from Hurricane Francine. API data however showed a crude build of 1.96mbbl, according to Bloomberg. Gasoline rose 2.34mbbl and distillate built 2.3mbbl.
  • The US is seeking up to 6mbbls of crude for the SPR for delivery in the first few months of 2024, a Reuters source said, with prices below the target buyback price.
  • Diesel and gasoline cracks rose yesterday with support from refinery maintenance and possible run cuts but remain under pressure due to weaker demand.
    • Brent NOV 24 down 0.7% at 73.17$/bbl
    • WTI OCT 24 down 0.7% at 70.68$/bbl
    • Brent NOV 24-DEC 24 down 0.02$/bbl at 0.67$/bbl
    • Brent DEC 24-DEC 25 down 0.14$/bbl at 1.62$/bbl
    • US gasoline crack down 0.1$/bbl at 12.51$/bbl
    • US ULSD crack down 0.2$/bbl at 18.76$/bbl