Crude Oil Rises as Gasoline Cracks Recover, Brent Surpasses $84/b

Quantum Commodity Intelligence – Crude oil futures edged higher on Monday, with the benchmark extending strong gains from the previous week as sentiment improved with a rebound in distillate cracks.

First month August 24 ICE Brent futures were trading at $84.03/b (1815 GMT), compared with Friday’s $82.62/b after gaining more than 3.5% last week.

At the same time Jul24 NYMEX WTI trade at $80.15/b, versus Friday’s settlement of $78.45/b. The more liquid August 24 contract was trading $79.54/bfrom the previous settlement of $78.05/b

Crude oil prices are now comfortably back above pre-OPEC+ meeting levels on June 2, falling as much as 6% after the producer group said it planned to start tapering cuts from October.

But oil markets are expected to remain in deficit for the balance of 2024, while pledges last week from a number of key OPEC+ producers to tighten production provided further support.

Russia, Iraq and Kazakhstan all said they were in talks with the OPEC Secretariat to work out production schedules that would include compensation cuts for over-quota output.

Markets at the start of the summer were also weighed down by shrinking refining margins and subsequent cuts, but firmer diesel prices aided a broader oil recovery last week.

“Crude oil posted its biggest weekly gain in nearly two months on signs of strong demand in fuel markets. Europe’s diesel market is tightening with the premium over crude rising to a two-month high,” ANZ cargo strategist Daniel Hynes also said, noting that air transport industry body IATA expects 10 .5 million flights in Q3 2024, with passenger numbers again above pre-Covid levels.

European diesel markets turned back for the first time in two months, pointing to near-term support for the industrial road fuel.