Oil Market Struggles for Gains on China Demand Concerns

Oil markets are balancing lackluster stimulus measures in China and potential Fed rate hikes in the US against tighter supplies as OPEC+ cuts start making significant dents into global inventories.

• Brent OCT 23 down -0.1% at 84.31$/bbl
• WTI OCT 23 down -0.2% at 79.96$/bbl
• Gasoil SEP 23 down -1.2% at 936.25$/mt
• WTI-Brent unchanged at -4.35$/bbl
• The Chinese demand recovery has a weaker outlook for the remainder of this year by Chinese refiners. China’s biggest refiner, Sinopec, said Monday that the country’s product demand in the second half would expand at a slower pace than in the first.
• Investors await key US economic data releases later this week that will help determine the path of interest rates this year. This week the focus will be on the US personal consumption expenditures price index report that is due on Thursday and the August nonfarm payrolls data on Friday.
• Tropical Storm Idalia hit western Cuba on Monday and was almost a hurricane as it headed toward Florida. The storm is likely to cause power outages and could impact crude production on the eastern side of US Gulf Coast.
• Turkish officials said Monday they were about to finish technical work on the key Iraqi pipeline halting flows from Northern Iraq and were aiming to make it operational as soon as possible. Its timeline and commitment from both parties remains unclear.
• Timespreads continue to signal strength because of OPEC+ cuts, led by Said and Russia.
• The gaps between the nearest two contracts for WTI and Brent have established backwardation, with nearby contracts at a premium to longer-dated ones.
• Brent OCT 23-NOV 23 up 0.02$/bbl at 0.57$/bbl
• Brent DEC 23-DEC 24 unchanged at 4.47$/bbl
• US cracks have fallen back this week after surging Friday on Garyville fire news. Marathon informed the markets that the refinery was operating at reduced rates Monday but a plan was being put together to bring the refinery back to full operation. There is no public timeline but an apparent lack of damage to the refinery itself appears to have eased market fears.
• GasBuddy placed US gasoline demand at 8.86mn bpd last week, down by 0.7% from the week prior as the US summer driving season unwinds.
• US gasoline crack up 0.4$/bbl at 27.93$/bbl
• US ULSD crack up 0.8$/bbl at 53.31$/bbl