OIL: Crude Holds Gains Driven by US Stocks Draw and Softer USD

Crude front month is holding onto gains from yesterday after rebounding from the losses driven by China demand concern earlier in the week.  Crude was supported by weekly EIA data showing a further US crude inventory drawdown and with a softer US dollar amid expectations for a Fed rate cut in September improving the demand outlook.

• US crude inventories showed a larger than expected draw of 4.87mbbl while refinery utilisation fell to reverse much of the gains seen the previous week. This is the third straight weekly drawdown taking stocks to the lowest since February and below the 5-year seasonal average.
• Wildfires across Alberta are threatening more than 0.4mb/d of oil production, according to Bloomberg, with 47 new fires emerging in the past 24 hours most south of Fort McMurray. Western Canadian Select discount to WTI has narrowed to $13.4/bbl. 
• China’s Customs General Administration reported that June oil import volumes fell 10.7% y/y down from a fall of 8.7% y/y in May. Product imports fell 32.4% y/y after -3.6% but export volumes rose 19% y/y up from 9.5% driven by diesel and kerosene.
• Gasoline and diesel cracks are sliding further with an increase in US stock levels and softer four-week implied demand data.
  • Brent SEP 24 up 0.7% at 85.65$/bbl
  • WTI AUG 24 up 0.9% at 83.6$/bbl
  • Brent SEP 24-OCT 24 up 0.03$/bbl at 1.15$/bbl
  • Brent DEC 24-DEC 25 up 0.11$/bbl at 5.15$/bbl
  • US gasoline crack down 0.3$/bbl at 22.02$/bbl
  • US ULSD crack down 0.1$/bbl at 21.71$/bbl