Oil Summary: Crude Edges Higher

Crude oil edges back positive on the day after IEA earlier revised up its global oil demand forecast for this year to 102.2mbpd.

• Brent OCT 23 up 0.8% at 87.05$/bbl
• WTI SEP 23 up 0.8% at 83.49$/bbl
• IEA has revised up its global oil demand forecast for this year to 10.2mbpd, up from 102.1mbpd in July, boosted by strong summer air travel, increased oil use in power generation and surging Chinese petrochemical activity. OPEC yesterday kept its global oil demand forecast stable for this year at 102mbpd but showed a supply deficit of more than 2mbpd in Q3.
• JP Morgan forecasts Brent crude prices to continue to rally to $90/bbl or above by September, while prices are expected to ease back in the fourth quarter of this year and 2024.
• Time spreads followed the decline late yesterday after near term spreads had spiked higher in recent days on the increasing supply risks amid Black Sea tensions. The prompt Brent spread reached the highest since March while the prompt WTI spread rose to the highest since November.
• Brent OCT 23-NOV 23 up 0.12$/bbl at 0.68$/bbl
• Brent DEC 23-DEC 24 up 0.24$/bbl at 5.22$/bbl
• The narrowing trend in the WTI crude second month 25 delta put skew has steadied after closing to the least bearish since March earlier in the week. Although the near term skew has closed in recent months the skews for contracts in 2024 have remained relatively unchanged.
• The second month WTI 25 delta call-put skew has risen from nearly -8% in May up to -3.1% today. The WTI Dec24 call-put skew is however almost unchanged during the same period at -7.1% compared to -7.4% in late May.
• China is expected to buy around 40% more crude from Saudia Arbia in September versus August via term contracts amid the start up of the Rongsheng mega refinery.
• Indian buyers have no plans to reduce Russian crude imports, despite narrowing discounts to global benchmarks.
• Crude oil production in Nigeria fell 12.56% in July to 1.29m b/d, compared to 1.48m b/d in June.
• The Argentine province of Neuquen exported a record 2.77m bbls of oil in June, driven by higher production at Vaca Muerta.
• At least one European refiner requested less term-supply from Saudi Aramco for September according to people with knowledge of matter.
• Spending on conventional oil and gas exploration is growing and expected to top $50 billion this year, the highest since 2019, but discovered volumes are falling to new lows, according to Rystad Energy.