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OIL: Crude Weighs Middle East Conflict and China Support Against Oversupply Risk

OIL
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Crude markets have gained through the high from Friday but well below the peak of $75.87/bbl earlier last week with rising Middle East tensions offsetting some of the pressure from market oversupply risks ahead of the OPEC JMMC monitoring committee meeting this week.

  • Middle East tensions are supportive following Israel's killing of Hezbollah's leader, while Israel also bombed targets in Yemen. The response from Iran will be in focus although the impact of physical oil flows has been limited so far while the conflict comes up towards a 1yr anniversary.
  • China stimulus announcements last week and the weekend news of easier housing restrictions in 3 major cities is set against mixed PMI prints from China. The official PMI manufacturing read improved but remains sub 50.0 while the Caixin PMI slumped comfortably back below this point.
  • Oil faced downside pressure last week over OPEC+ sources led stories suggesting the group will bring barrels back with Saudi eager on protect market share. Argus and CNBC sources articles however suggested OPEC+ is staying its path. The next JMMC that can recommend changes to the group meets on Oct. 2.
  • Crack spreads are holding steady after a net gain in diesel spreads since mid September amid refinery maintenance, stocks draws, slightly improved weekly implied demand and soft underlying crude prices.
    • Brent DEC 24 up 1.3% at 72.44$/bbl
    • WTI NOV 24 up 1.1% at 68.94$/bbl
    • Brent DEC 24-JAN 25 down 0.02$/bbl at 0.31$/bbl
    • Brent DEC 24-DEC 25 up 0.23$/bbl at 1.34$/bbl
    • US gasoline crack up 0.2$/bbl at 12.75$/bbl
    • US ULSD crack up 0.1$/bbl at 22.47$/bbl
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Crude markets have gained through the high from Friday but well below the peak of $75.87/bbl earlier last week with rising Middle East tensions offsetting some of the pressure from market oversupply risks ahead of the OPEC JMMC monitoring committee meeting this week.

  • Middle East tensions are supportive following Israel's killing of Hezbollah's leader, while Israel also bombed targets in Yemen. The response from Iran will be in focus although the impact of physical oil flows has been limited so far while the conflict comes up towards a 1yr anniversary.
  • China stimulus announcements last week and the weekend news of easier housing restrictions in 3 major cities is set against mixed PMI prints from China. The official PMI manufacturing read improved but remains sub 50.0 while the Caixin PMI slumped comfortably back below this point.
  • Oil faced downside pressure last week over OPEC+ sources led stories suggesting the group will bring barrels back with Saudi eager on protect market share. Argus and CNBC sources articles however suggested OPEC+ is staying its path. The next JMMC that can recommend changes to the group meets on Oct. 2.
  • Crack spreads are holding steady after a net gain in diesel spreads since mid September amid refinery maintenance, stocks draws, slightly improved weekly implied demand and soft underlying crude prices.
    • Brent DEC 24 up 1.3% at 72.44$/bbl
    • WTI NOV 24 up 1.1% at 68.94$/bbl
    • Brent DEC 24-JAN 25 down 0.02$/bbl at 0.31$/bbl
    • Brent DEC 24-DEC 25 up 0.23$/bbl at 1.34$/bbl
    • US gasoline crack up 0.2$/bbl at 12.75$/bbl
    • US ULSD crack up 0.1$/bbl at 22.47$/bbl