U.S. Demand Optimism and Market Tightness Add to Crude Support Friday

Oil markets have recovered back to similar levels found on Monday having sold off this week due to a lack of Beryl impact and weak mid-week economic data out of China.

• Brent SEP 24 up 0.9% at 86.18$/bbl
• WTI AUG 24 up 1.1% at 83.54$/bbl
• Summer demand optimism out of the U.S. was sparked by this week’ s EIA report, giving hope to summer travel demand which has so far failed to impress. Fed rate cut optimism and a weak dollar have also added support.
• Data on Thursday showed that U.S. consumer prices slid in June.
• While arguments can be made for downside risks, such as Asian demand, there are a number of indicators that suggest crude is headed for a tight summer, highlighted by the time spreads this week.
• Global crude/condensate exports fell by almost 180kbd in June according to Vortexa – coming in at 38.5mbd, a 4-month low.
• Although above its quota, Russia has shown intent to cut production, along with Iraq.
• The hurricane supply side risk has diminished at present while wildfires in Canada threaten significant portions of oil sand production.