Oil futures: Brent retreats from highs, holds above $119/b
Quantum Commodity Intelligence - Crude oil futures Monday were slightly lower although markets consolidated most of the post-OPEC+ gains as supply-side concerns underpinned the energy complex, while the hike in Saudi's OSPs further underscored broader market strength.
Front-month August ICE Brent futures were trading at $119.49/barrel (1720 GMT), compared to Friday's settle of $119.72/b, but having traded at a high of $121.95/b on Monday.
At the same time, July NYMEX WTI was trading $118.46/b, versus Friday's settle of $118.87/b.
"Concerns of supply side disruptions are dominating markets, supported by expectations of an improving outlook in China," said ANZ commodity strategist Daniel Hynes.
Despite OPEC+ announcing a combined production increase of 648,000 bpd in July, the majority of members are unable to increase capacity, which analysts say means OPEC+ will not be able to fill the shortfall left by Europe tightening sanctions against Russia.
Saudi Arabia increased July OSPs for its flagship Arab light crude in Asia to $6.50/b over Platts Dubai/DME Oman, up from +$4.40/b for June-lading barrels.
Although the hikes were widely anticipated, premiums for Asia were at the top end of expectations, but the firm market structure and strong refining margins supported the increases.
The key M1/M3 Dubai cash spread, which is used by Saudi Aramco and other Middle East National Oil Companies (NOCs), averaged at $5.13/b in April compared to $3.65/b in May, while gasoline and distillate cracks hit record highs in May.
Despite high costs, demand for transportation fuels continues to surge.
"In some places, the demand rebound is quite something," Mike Muller, head of Asia at Vitol Group, told Sunday's Gulf Intelligence energy markets podcast.
