OIL: Crude on for Net Weekly Delcine as Demand Concerns Offset Geopolitical Risk

Crude front month pulled back yesterday with a stronger dollar and demand growth concerns weighed against rising Middle East tensions, and are heading for a net decline on the week. US economic data yesterday added to concern for future US oil demand to combine with ongoing China demand concerns to weigh on prices. 

• Reports stated that President Biden reiterated support for Israel in the face of escalating tensions in the Middle East region, promising ‘New Defensive US Military Deployments, according to Bloomberg.
• The OPEC + JMMC meeting did not issue a recommendation on Thursday according to delegate reports. About 540kb/d of supply are due to be added over the course of Q4 but OPEC+ has reiterated the option to pause or reverse the current plans to return output from October.
• Crude oil imports to Asia fell to the lowest in two years in July amid weak demand in China and India, according to LSEG Data.
• Crude backwardation has also softened in recent weeks suggesting a less tight balance although time spreads have found support since July 30 on the heightened geopolitical risks.
• Gasoline cracks fell yesterday in line with the move in crude futures although the diesel spreads found some support.
  • Brent OCT 24 up 0.8% at 80.13$/bbl
  • WTI SEP 24 up 0.8% at 76.92$/bbl
  • Brent OCT 24-NOV 24 up 0.03$/bbl at 0.6$/bbl
  • Brent DEC 24-DEC 25 up 0.11$/bbl at 3.65$/bbl
  • US gasoline crack down 0.1$/bbl at 24.3$/bbl
  • US ULSD crack down 0.1$/bbl at 24.74$/bbl