OIL: Crude Softer After OPEC Agree to Return Some Supply From October

Crude prices are softer today to extend the decline from last week, falling to the lowest since early February at 80.55$/bbl after the OPEC producer group agreed to extend production cuts into Q3 before returning some supply later this year.

• The return of some supply earlier than some analysts had expected is adding bearish pressure to the market to add to ongoing concerns for global demand amid a weaker US economic outlook and China demand growth uncertainty.
  • Brent AUG 24 down 0.2% at 80.94$/bbl
  • WTI JUL 24 down 0.2% at 76.86$/bbl
  • Gasoil JUN 24 down 0.2% at 730$/mt
  • Brent AUG 24-SEP 24 unchanged at 0.24$/bbl
  • Brent DEC 24-DEC 25 down 0.02$/bbl at 3.56$/bbl
• OPEC cuts of 3.66mbpd will be extended until the end of 2025. Voluntary cuts of 2.2mbpd are extended for three months but will then be reduced over the year from October. The agreement seems a compromise as Saudi Arabia wants higher prices to fund its economic plans but other members such as UAE are seeking to increase output volumes. An additional 750kbd of supply is estimated by January according to Bloomberg.
• Middle East negotiators are urging Israel and Hamas to agree to a ceasefire and hostage release deal outlined by U.S. President Joe Biden on Friday but Israel said there will be no formal end to the war while Hamas retains power.
• The Brent option put skew is the most bearish since December and curve backwardation is the weakest since February.
• Gasoline and diesel cracks are steady today after declines last week amid rising refinery run rates which are boosting global supplies while initial demand at the start of peak US driving season has underwhelmed.
  • US gasoline crack up 0.4$/bbl at 24.85$/bbl
  • US ULSD crack down 0.2$/bbl at 22.95$/bbl