Crude now flat on the day
The oil bulls are having another good day.
Crude was caught in the downdraft from the dollar strength earlier today and the retracement in natural gas prices. That took crude down to $71.53 but it's since climbed all the way back to $72.70 for a slight gain on the day.
One of the drivers for the turnaround was a report that spot premiums for November Russian crude jumped to $4.50-$4.80 on high demand from China and Japan.
That oil is often used by independent Chinese refineries. The thinking might be that China's SPR release is more of a sign of independent refiners building back inventories rather than a lasting drawdown. It's all the more difficult to evaluate given the opacity of Chinese supplies.
Credit Suisse with a rundown of oil market fundamentals today said:
- Covid cases are falling globally and that's key to a demand recovery, estimates from the EIA for oil demand next year are varied with the EIA and OPEC 1.5 mbpd apart and OPEC forecasting pre-pandemic demand
- Supply outages not just Ida-related. Also Mexico, Russia, Nigeria and Libya issues. OPEC also producing light led to -550k bpd in Aug from July. Expect Sept to be even with Aug but will improve from there.
- US oil inventories are 7.6% below 5 year avg
- Expect Brent to avg $75 in H2 and WTI to avg $72