OIL: Crude Higher on China Data but Holding Within Range

Crude prices are ticking higher today but holding within the $2/bbl range seen since June 19. Oil prices are supported by a pickup in China’s Caixin manufacturing PMI, a softer US dollar and geopolitical uncertainty amid escalating tensions between Israel and Hezbollah. 

• China’s Caixin manufacturing PMI for June rose to 51.8 from 51.7, higher than expected and the highest in three years. However, the official manufacturing PMI released Sunday was stable at 49.5, still in contractionary territory.
• Hopes of a US Fed interest rate cut have supported oil but US President Biden’s weak performance in last week’s election has clouded the election outlook.
• Expectation of an active hurricane year are an added market risk with Hurricane Beryl the latest storm forecast to be headed towards the Gulf of Mexico.
• Time spreads are holding near the highest since late April suggesting the market is tight and money market net longs are increasing after the drop during May.
  • Brent SEP 24 up 0.7% at 85.56$/bbl
  • WTI AUG 24 up 0.6% at 82.07$/bbl
  • Brent SEP 24-OCT 24 down 0.01$/bbl at 0.8$/bbl
  • Brent DEC 24-DEC 25 up 0.15$/bbl at 5.13$/bbl
• Diesel and gasoline cracks are edging higher after a pullback late last week amid uncertainty surrounding US demand ahead of a potential boost from the July 4 holiday period.
• Russia is extending the permit for gasoline exports from June 30 until July 31 according to a decree published on Saturday as refineries have returned from heavy outages earlier this year.
  • US gasoline crack up 0.4$/bbl at 24.28$/bbl
  • US ULSD crack down 0.1$/bbl at 25.18$/bbl