Oil Summary at European Close: Crude Down on Abating Conflict Escalation Fear

Crude markets have furthered their decline to reverse yesterday’s gains amid diminishing fear of disruption to Iranian oil exports due to the conflict in Israel. Brent is currently set to fall around 3.75% since the start of the week and is down a similar level on the month.

• The leader of Lebanon-based and Iran-backed militant group Hezbollah, Hassan Nasrallah, has said, in his first speech since the start of the Israel-Hamas war, that "This decision to launch operation was 100% Palestinian, its owners hid it from everyone."
• Brent JAN 24 down -1.2% at 85.77$/bbl
• WTI DEC 23 down -1.3% at 81.38$/bbl
• Concern for soft global demand is helping any limited upside moves after disappointing China PMI data this week although the US Fed suggested a more dovish tone after as expected keeping rate unchanged this week.
• US Payrolls undershot expectations with 150k vs cons 180k (even more so for private at 99k vs cons 145k) and with a heavy -101k two-month revision.
• Global crude oil markets are expected to be balanced through Q4 2023 with the Israel war risk fading and with slower demand growth according to JPMorgan. The bank maintains a Brent forecast to average 85$/bbl in Q4 with the year end at 86$/bbl and an average of 83$/bbl in 2024.
• Oil and gas rig counts globally rose to 1,777 in October, up 17 on the month, according to Baker Hughes.
• Reuters headlines from the Russian Energy Ministry confirm earlier comments by Novak that the 300,000 bpd export cuts as part of the voluntary OPEC+ commitment include both oil and oil products.
• Russian seaborne crude oil exports rose to 3.53mbpd in October, the highest level in four month and up by 7.4% from September levels according to tanker-tracking data from S&P.
• China’s independent refineries will have to cut runs further in November because of limited crude import quotas – a trend expected to continue until import quotas are issues for 2024 according to Platts sources.
• Kazakhstan could export up to 10 million additional tonnes of oil to China according to Energy Minister Almasadam Satkaliyev earlier.
• Construction on the Canadian Trans Mountain oil pipeline expansion was ordered to stop Thursday by the Canada Energy Regulator due to environmental and safety non-compliances.
• Canadian Natural Resources expects Western Canadian Select/WTI diffs to narrow into 2024 because of the Trans Mountain pipeline expansion. It is due to be operational early next year.
• Azerbaijan’s crude and condensate output is expected to be 30.5m mt in 2023, down 6.7% on the year, according to Bloomberg citing a report of Azerbaijan’s State Chamber of Accounts.
• Medium-sweet grades from the Americas increased to Europe in October according to Vortexa. Brazil and Guyana pushed out West African medium-sweet suppliers.