Oil futures: Crude eases on late profit-taking, Brent holds around $100/b

Quantum Commodity Intelligence - Crude oil futures Thursday were trending lower following a late spell of profit-taking, but markets largely shrugged off any would-be bearish indicators, including a gasoline demand slowdown in the US and potential progress on Iranian nuclear talks.

Front-month October ICE Brent futures were trading at $99.95/b (1900 GMT), compared to Wednesday's settle of $101.22/b, while the Nov22 contract was trading at $99.04/b  

At the same time, October NYMEX WTI was trading $93.06/b versus Wednesday's settle of $94.83/b.

Headline crude prices had rallied nearly $10/b from Monday's low, which came just before comments from the Saudi minister indicated the OPEC kingpin would consider production cuts due to what it said was a disconnect between futures and fundamentals.

"The tug-of-war between crude demand destruction and a plethora of drivers on why the oil market will remain tight should still suggest prices won't fall much lower. Oil's outlook still looks positive," said Ed Moya, senior market analyst at brokerage Oanda.

Prices were also underpinned by further record-high settlements in European natural gas and Asian LNG benchmarks on Wednesday, which is likely to encourage further oil-to-gas switching.

European natural gas prices resumed its surge Thursday with the benchmark TTF price for Oct22 closing at a fresh contract high of €325.981/MWh, up around 10% on the day, and just short of the all-time high of €345/MWh in March. 

Demand

The latest data from the EIA revealed that US oil products demand tumbled by nearly 1.9 million bpd last week – its sharpest fall since December – sparking fresh fears that inflation and high energy prices may curb oil demand.

Half that fall was gasoline, which slumped by 914,000 bpd on the week to 8.43 million bpd, down 1.1 million bpd (12%) on the year and 13% below pre-Covid levels.

Patrick De Haan of the GasBuddy website reported this Sunday's US gasoline demand was down 2.8% week-on-week and some 4.3% below the average of the last four Sundays, further indicating the driving season is winding down.

Demand concerns had dominated market sentiment before this week's comments from the Saudi minister, but recessionary fears remain a key consideration as investors globally will be keeping a close watch on Federal Reserve Chairman Jerome Powell's remarks during the Jackson Hole Economic Policy Symposium on Friday.

"I think people are getting a little bit carried away by the remark by the Saudi Minister. The biggest concern right now is not how much or how little the OPEC+ countries might increase or decrease their production, but rather the demand side of things," said oil analyst Neil Atkinson and former head of oil markets at the IEA, speaking on the Gulf Intelligence energy markets podcast.

Meanwhile, Iran confirmed it had received a response from the United States to the EU's "final" text for a revival of Tehran's 2015 nuclear deal with major powers, but there was no timeline given for Iran's likely counter.