OIL: Crude Edges Higher Suppoted by Risk of Lower Libya and Iraq Supply

Crude futures and time spreads are edging higher after a rally yesterday to a WTI high of $76.91/bbl on reports that Iraq plans to cut oil output in September to add to the current reduction in supply from Libya. Prices pulled back slightly late in the day but are still net higher on the week.

• US confirmed that the economy is not slipping into recession as some fear with 2Q GDP revised up to 3.0%, from advanced estimates of 2.8% with the US consumer spending a main driver.
• All eastern Libyan oil terminals received instructions to stop operations Aug. 29 as the dispute between Eastern and Western Libyan governments over control of the Central Bank has reached stalemate. Around 0.7m b/d of Libyan production was offline on Aug. 29, Reuters said. Production losses could reach between 0.9m and 1mbpd and last for several weeks, according to Rapidan Energy.
• Iraq plans to trim output to 3.85m-3.9m b/d in September, Reuters said, part of its compensation for exceeding its 4m b/d OPEC quota. The federal Iraqi government has issued an ultimatum to the KRG to cut crude output to ‘the minimum required’.
• Saudi Aramco may cut the Arab Light OSP to Asia by $0.85/bbl in October, according to Bloomberg.
• Diesel and gasoline cracks rebounded yesterday after diesel fell to multi-year lows due strong supplies and tepid demand although upcoming refinery maintenance could add some support.
  • Brent NOV 24 up 0.4% at 79.17$/bbl
  • WTI OCT 24 up 0.4% at 76.22$/bbl
  • Brent NOV 24-DEC 24 up 0.04$/bbl at 0.88$/bbl
  • Brent DEC 24-DEC 25 up 0.09$/bbl at 3.7$/bbl
  • US gasoline crack up 0.3$/bbl at 12.89$/bbl
  • US ULSD crack up 0.6$/bbl at 22.06$/bbl