Oil Decline Pauses but Demand Growth Remains in Focus

Crude futures are finding some support today on an improved risk sentiment following a fall yesterday to the lowest close since the middle of July. A bearish demand outlook in the US and China is weighing on prices while supply concerns linked to the conflict in the Middle East have eased recently. Russia crude exports have also increased recently despite the ongoing pledge to cut output by 300kbpd until the end of the year.

• Brent JAN 24 up 0.8% at 80.2$/bbl
• WTI DEC 23 up 0.7% at 75.88$/bbl
• Gasoil NOV 23 down -1.9% at 823$/mt
• WTI-Brent down -0.15$/bbl at -4.34$/bbl
• Oil demand growth is China remains a concern after CPI data showing that China has returned to deflation has added to the recent weaker manufacturing data and falling oil products exports.
• Crude backwardation is reflecting the lower demand and steady supplies with the prompt spreads the lowest since mid July and the Jun24-Dec24 spread the lowest since August. The Brent Jan24-Feb24 spread traded as low as 0.08$/bbl yesterday compared to over 1.3$/bbl on 20 Oct.
  • Brent JAN 24-FEB 24 up 0.08$/bbl at 0.21$/bbl
  • Brent JUN 24-DEC 24 up 0.04$/bbl at 1.85$/bbl
• The Russian government is discussing with oil companies to lift the ban on some gasoline exports. Russia’s oil product exports are showing signs of recovery driven by fuel oil and jet fuel following export restrictions and seasonal maintenance. Gasoline cracks are steady after this week recovering from lows in mid-October with some limited demand support. Diesel cracks are again slightly softer with the wider market demand growth picture offsetting low global inventories.
  • US gasoline crack down -0.2$/bbl at 13.99$/bbl
  • US ULSD crack down -0.1$/bbl at 39.84$/bbl