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OIL: Crude Holds Within Range After US Stocks Build and Softer Demand

OIL

Front month crude remains within a $1.75/bbl range in the last week despite volatile trading within day yesterday following an unexpected build in US crude inventories and signs of lower US demand. 

  • A potential supply deficit in Q3 is supportive but set against uncertain longer term demand growth especially in US and China. Geopolitical risks include conflict in the Middle East, Russian energy infrastructure strikes and upcoming Iran and French elections.
    • Brent AUG 24 down 0.1% at 85.19$/bbl
    • WTI AUG 24 down 0.1% at 80.8$/bbl
    • Brent AUG 24-SEP 24 up 0.01$/bbl at 0.79$/bbl
    • Brent DEC 24-DEC 25 down 0.09$/bbl at 4.59$/bbl
  • EIA showed an unexpected build in US crude stocks as refinery utilisation fell for the second week to 92.2% while production held unchanged on the week.
  • Oil and gas activity in Texas, Louisiana, and New Mexico rose modestly in Q2, according to the Dallas Fed survey on Energy firms, cited by Reuters. On average, executives expected WTI to be around $79/bbl at year-end 2024, down from $80/bbl forecasted in Q1.
  • A drop in gasoline and distillates implied demand has added to the downside pressure but optimism for a boost to US demand over the July 4 holiday period and over the summer continue to support crack spreads.
  • US gasoline crack up 0.4$/bbl at 25.35$/bbl
  • US ULSD crack up 0.2$/bbl at 26.42$/bbl

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