Oil Summary: Crude Holds Steady

Crude prices are holding mostly steady today as the market awaits information on Saudi Arabia’s OSPs and production levels for September, after gains yesterday saw a continuation of the rally since mid-July driven by tighter OPEC supply and improving economic expectations as the US looks to avoid a recession.

• Brent OCT 23 down -0.2% at 85.27$/bbl
• WTI SEP 23 down -0.3% at 81.54$/bbl
• The Brent second month implied volatility has fallen to the lowest since January 2020 after a steady decline in the last couple of months. Brent ATM implied volatility has fallen from just below 40% in early May down to around 27.2% while WTI volatility is down to 28.1%.
• The latest Reuters and Bloomberg surveys suggested Saudi Arabia may hike its price for Arab Light crude for sale to Asian refineries for September. Saudi Arabia is expected to extend the 1mbpd output cut into September.
• Nigeria’s Forcados oil terminal is expected to complete repairs by early next week.
• Kazakhstan’s oil output fell to a 9-month low of 1.72mbpd in July amid power outages.
• Chinese crude imports from Iran are poised to rise to a new record in August of 1.37mbpd.
• Indian imports of Russian oil declined for a second month in July to 2.09mbpd.
• Russian Urals crude prices averaged $64.37/bbl in July according to the Finance Ministry.
• Russian seaborne diesel and gasoil exports grew 5% month-on-month to 3.8m mt in July.
• China’s fuel export quotas for the whole of 2023 may exceed 2022 levels according to JLC. The third batch of quotas is expected in early-August.
• US gasoline cracks are holding steady this week after a rally from around $34-40.2/bbl during July. US RBOB front month last week reached the highest since October at nearly 3.0$/gal as US refineries are struggling to return to peak utilization rates and high temperature forecasts into August could continue to limit refinery gasoline output at the end of the summer driving season ahead of the autumn turnaround season.