OIL: Crude Extends Pull Back on Unwinding Middle East Risk Sentiment

Crude futures and time spreads have fallen back to levels from Aug 7 as the Middle East risk premium is unwinding further after Israel accepted the US’ “bridging proposal” for a ceasefire in Gaza.  Pressure is building on Hamas to do the same.

• Softening China growth expectations are also weighing on markets.  Lower growth forecast adds to the market uncertainty over whether the OPEC+ producer group with stick to the current plan to return some supply from October.
• Libya's Sharara oilfield production has risen to 85kb/d to supply the Zawia oil refinery, according to Reuters sources. It is unclear if there will be a further increase in production to full capacity of around 300kb/d to resume exports and lift the force majeure.
• A net decline in US crude inventories since late June has added price support despite a small build last week. Another draw of 2.9mb/d is expected this week according to a preliminary Reuters survey ahead of API data today and EIA data tomorrow.
• Diesel and gasoline crack spreads remain is a downwards trend since the start of the month driven by muted demand and healthy global supply.
• U.S. gasoline demand saw a rise of 0.3% for the week ending August 17 w/w to 8.96mb/d but was 1.1% below the 4-week average according to GasBuddy.
  • Brent OCT 24 down 0.6% at 77.22$/bbl
  • WTI OCT 24 down 0.6% at 73.22$/bbl
  • Brent OCT 24-NOV 24 down 0.08$/bbl at 0.48$/bbl
  • Brent DEC 24-DEC 25 down 0.1$/bbl at 2.89$/bbl
  • US gasoline crack down 0.1$/bbl at 20.66$/bbl
  • US ULSD crack down 0.1$/bbl at 20.64$/bbl