Oil futures: Brent rallies 4% as dollar slides, gasoil cracks rebound
Quantum Commodity Intelligence - Crude oil futures Friday were sharply higher, as concerns over diminishing Russian supplies ahead of the price cap, firmer diesel cracks and a weaker dollar combined to lift prices.
Front-month January ICE Brent futures were trading at $98.64/barrel (1835 GMT), compared to the day's low of $94.33/b Thursday's settle of $94.67/b.
At the same time, Dec22 NYMEX WTI was trading $92.72/b versus Thursday's settle of $88.17/b.
The looming diesel crunch came back to the fore as proposed strike action at BP's 400,000 bpd Rotterdam refinery could delay the restart of diesel-producing secondary units, union officials told Quantum on Thursday, amid a standoff over pay.
That helped to push ARA gasoil cracks to crude up $7.85/b on Thursday to a $53.31/b premium, recouping most of the week's heavy losses, although eased back Friday.
A blast at a Valero-operated refinery in Corpus Christi, Texas, could also upset the delicate US diesel balance.
US Deputy Treasury Secretary Wally Adeyemo will travel to Europe next week to discuss sanctions on Moscow and the implementation of what is expected to be a fixed-price cap on Russian oil, which could further add to the winter shortfall.
Russia has pledged not to deal with countries operating within the price cap, which could dramatically reduce Russian supplies.
The UK is also set to further clamp down on services supporting Russian oil exports, which will impact on shipping and insurance.
For now, Russian diesel loadings at the Baltic port of Primorsk in November are set to increase 58% on the month to around 1.5 million tonnes.
China
Persistent rumours this week that China is considering relaxing its zero-Covid policy in the new year have also helped sentiment this week, but there has been no official word of a change in policy.
On the downside, financial markets have been rattled since US Fed Chair Jerome Powell said on Wednesday that it was "very premature" to be thinking about pausing its rate hikes, which boosted the dollar this week.
However, the dollar index slumped around over 1.5% Friday to around 111 points, boosting oil prices.
In Europe, the Bank of England cautioned on Thursday that Britain had entered a recession and the economy might not happen for another two years.
Meanwhile, Saudi Aramco has cut its Official Selling Prices (OSPs) for December-loading crude, largely in line with expectations after backwardation in the underlying Dubai benchmark narrowed last month.
For Aramco's key customer base in Asia, differentials for the flagship Arab Light were cut to Platts Dubai/DME Oman +$5.45/b for loading next month versus +$5.85/b for loading in November.
