Oil Summary at European Close: Crude Up on Continued Output Cuts

Crude oil prices have traded following Russia and Saudi Arabia pledge to maintain output cuts until the end of the year. Most of crude’s war-risk premium has been erased as the Israel-Hamas conflict remains contained in Gaza.

• Brent JAN 24 up 1% at 85.7$/bbl
• WTI DEC 23 up 1.2% at 81.48$/bbl
• Saudi Arabia and Russia have reaffirmed intention to keep output cuts in place until the end of the year. Saudi will review the output next month and consider “extending the cut, deepening the cut, or increasing production,” according to the Saudi Press Agency.
• Saudi Aramco maintained its OSP to Asia for Arab Light and Super light in December but adjusted other grades to Asia as prices to Europe where cut and to North America were left unchanged.
• Despite eased US sanctions last month, TankerTrackers still identifies 41 dark fleet tankers waiting off Venezuela with hidden AIS outside the San Jose terminal – drawing questions about the possibility of the latest deal reversing.
• The amount of crude held on tankers that have been stationary for at least seven days fell by 6.7% on the week to 74.10mn barrels as of 3 November, Vortexa data showed.
• Iraq’s crude oil exports in October rose to 3.534mbpd, up from 3.438mbpd and the highest level since March, preliminary Oil Ministry data showed.
• India oil demand rose by 3.7% y/y to 19.260 million tons in October in the latest PPAC figures.
• Chinese refiners are expected to process 15.1 mn bpd in November, down from 15.37 mn bpd in October according to FGE with cuts at both state refiners and teapots.
• China’s independent refineries cut purchases of Venezuelan heavy feedstock bitumen blend in October as rising competition emerges after the US eased sanctions on the South American nation last month according to Platts sources.
• Feedstock imports among independent refineries in China’s Shandong Province fell 7.41% on the month in October to 10.06m mt, according to OilChem.
• Lower China refining margins means lower appetite for crude oil by the world’s biggest oil consumer in the next few months according to the head of Vitol Asia Mike Muller in the Gulf Intelligence daily energy podcast.
• Venezuela’s PDVSA is in talks with domestic and foreign oilfield firms to inquire about equipment and services to increase crude oil production after the US relaxed sanctions on the country, a source told Reuters.
• Dry weather and drought conditions are likely to force large oil tankers to stop using the Panama Canal according to a note from Poten & Partners.
• Brent crude oil prices are forecast to average $90/bbl in 2024, with a deep oil market deficit during the second half of the year to lift Brent prices to an average $95/bbl during 2H 2024, ING’s Head of Commodities Strategies, Warren Patterson, said.
• Energy Aspects expects crude to remain rangebound despite recent volatility on the back of weak macro-economic data on one side and the Hamas conflict at the other in a CNCB interview.
• Oil market tightness and a lack of spare capacity leaves the oil markets open to strong volatility swings according to Christyan Malek, global head of energy strategy and head of EMEA oil and gas equity research at JPMorgan in a CNBC interview.