Tight Markets Keep Oil Near Highs from Last Week

Crude markets are slightly softer today but still holding onto most of the recent gains after seeing an 8$/bbl rally since late August driven by tighter supplies due to OPEC+ cuts. Optimism that the US Fed has will paused the recent rate hike cycle is adding to the price support while the market also considers China growth amid strong crude imports.

• Brent NOV 23 down -0.2% at 90.48$/bbl
• WTI OCT 23 down -0.5% at 87.05$/bbl
• Gasoil SEP 23 down -0.4% at 984.5$/mt
• WTI-Brent down -0.13$/bbl at -4.03$/bbl
• The relative strength index, stochastic oscillators and Bollinger bands are suggesting that oil is overbought and thus there could be a correction, according to Bloomberg.
• Prompt time spreads have pulled back from the highs from last week but remain near the highest seen this year while Dec23-Dec24 is still trading at the highest since Jun 2022 reflecting the market concern for tighter supplies and global inventory drawdowns. The recent US inventory draws could ease with the upcoming refinery maintenance season and with uncertain demand growth in Q4, although the extended Saudi and Russia output cuts will keep supplies tight.
• The updated IEA, EIA and OPEC monthly reports due this week may help to understand the current market balance and expectations for the rest of the year.
  • Brent NOV 23-DEC 23 down -0.02$/bbl at 0.6$/bbl
  • Brent DEC 23-DEC 24 down -0.1$/bbl at 7.12$/bbl
• Diesel markets are extending the recovery from late last week with Gasoil time spreads at the highest since March amid tight supply concerns with low global stocks. The Sep-Oct refinery maintenance season could limit the ability to build stores ahead of the winter.
  • US gasoline crack up 0.2$/bbl at 24.38$/bbl
  • US ULSD crack up 0.7$/bbl at 51.57$/bbl