Oil Summary: Crude Slowed Losses

Crude has recovered some losses during today’s session after a stronger US dollar and softer Chinese crude import data weighed on prices.

• Brent OCT 23 down -0.5% at 84.89$/bbl
• WTI SEP 23 down -0.5% at 81.49$/bbl
• Chinese imports fell as the economy slowed amid muted summer industrial activity. China’s crude imports in July decreased to a six-month low at 43.69mn tons, down by 19% from June levels.
• A western section of the Druzhba pipeline has been fully repaired after a leak and flows have been restored on Monday evening.
• The latest EIA Short Term Energy Outlook report is due out later today as the market looks to assess the impact of economic concerns and OPEC+ cuts on a supply deficit largely expected this year.
• Crude inventories in the US Strategic Petroleum Reserve rose as the US has started refilling stocks from their 40-year low. Total inventories are up to 347.8m bbl on Aug 4 from the low of 346.8m bbl the previous week.
• The crude time spreads have followed the decline in front month futures in the last couple of days due to softer China imports and concerns for fuel oil demand growth, but curve backwardation remains strong with Saudi and Russian cuts expected to keep the market tight. The Brent Dec23-Dec24 spreads have pulled back from a high of 5.27$/bbl but well above levels around 2.75$/bbl from the start of July.
• Brent OCT 23-NOV 23 up 0.06$/bbl at 0.46$/bbl
• Brent DEC 23-DEC 24 down -0.04$/bbl at 4.63$/bbl
• The price differential between Brent and Dubai crude is trading increasingly negative as global crude flows redirect. The spread was at a discount of -1.60$/bbl 7 Aug compared with a premium of more than +3$/bbl in January. Brent generally trades at a premium to Dubai.
• Argentina's expected oil production growth has not progressed despite post-pandemic annual increases of 10-12% according to Kpler.
• Russia’s seaborne crude flows stabilized in the four weeks to Aug. 6, before Ukrainian naval drones attacked two Russian ships in the Black Sea
• US crude exports, including condensates derived from natgas, rose to 3.82m b/d in June, according to Bloomberg calculations from the US census data bureau.
• Saudi Arabia’s Council of Ministers today reaffirmed the Kingdom’s committed to strengthen the precautionary efforts of OPEC+ countries aimed at supporting the stability of oil markets, including the extension of the voluntary crude oil output cut of 1mbpd into September according to SPA.