Oil futures: Brent nears $96/b on weaker dollar, bullish US export figures
Quantum Commodity Intelligence - Crude oil futures Wednesday rallied strongly despite markets again being caught between the bleak economic outlook on the one side versus potentially tightening supplies with Russia volumes set to fall amid EU sanctions.
Prices also remain sensitive to volatile dollar rates, while the latest EIA figures revealed US crude oil and refined products exports surged last week to a new record of 11.4 million bpd, including 5 million bpd of crude.
Front-month December ICE Brent futures were trading at $95.97/b (1935 GMT), compared to the day's low of $92.06/b and Tuesday's settle of $93.52/b.
At the same time, Nov22 NYMEX WTI was trading $88.19/b versus Tuesday's settle of $85.32/b.
"Crude prices rose after constant reminders that the oil market is still tight. Saudi energy minister Abdulaziz noted that they need to retain spare oil capacity," said Ed Moya, senior market analyst at brokerage Oanda, referencing the minister's comments Tuesday.
Markets brushed off early weakness after American Petroleum Institute figures released late Tuesday revealed that US commercial crude inventories rose by 4.52 million barrels last week, against expectations for a much smaller rise. Gasoline stocks were down 2.28 million barrels, while distillate inventories rose by 0.635 million barrels.
The Dollar Index Wednesday dipped to fresh monthly lows of below110 points, over 1% lower on the day, making dollar-denominated oil imports less expensive.
Demand
Meanwhile, road travel in China's major cities was significantly subdued in the week its ruling Communist Party held its 20th National Congress, as restrictions returned to combat rising Covid-19 infections.
China's mobility halved between Golden Week at the start of October and last week's Communist Party congress, according to data from the search engine Baidu.
It coincided with another ramp-up of travel restrictions in China's big cities, including Beijing, where Covid cases quadrupled in the week to 20 October.
According to Baidu, mobility was around 24% lower than last year's Golden Week.
However, a winter supply squeeze as tighter Russian sanctions kick in remains a possibility as IEA chief Fatih Birol said the recent OPEC+ supply cut was "unfortunate" and that IEA members may tap oil reserves if supply is disrupted.
Investment bank Goldman Sachs increased its forecast for diesel margins in Europe and the US into next year on acute supply shortages and firm demand going into a critical winter period.
The US investment bank raised its forecasts for diesel cracks by $6/b next year, citing structural scarcity and increased demand due to gas-to-oil switching over the winter.
"Distillates are the centre of scarcity, with stocks at unprecedentedly low levels," the bank said.
