Oil futures: Crude higher as gasoil cracks recover, Brent tops $84/b

Quantum Commodity Intelligence – Crude oil futures in Monday were climbing higher with benchmarks extending the previous week's solid gains, as sentiment improved with the rebound in distillate cracks.

Front-month Aug24 ICE Brent futures were trading at $84.03/b (1815 GMT), compared to Friday's settle of $82.62/b, having gained more than 3.5% last week.

At the same time Jul24 NYMEX WTI was trading at $80.15/b, versus Friday's settle of $78.45/b. The more liquid Aug24 contract was trading $79.54/b, versus the previous settle of $78.05/b

Crude prices are now comfortably back above levels prior to the 2 June OPEC+ meeting, having tumbled by up to 6% after the producer group announced plans to start unwinding cuts from October.

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

Russia, Iraq and Kazakhstan have all said they are in talks with the OPEC Secretariat to work out production schedules that will include compensation cuts for producing over quota.

Early-summer markets had also been weighed down by slumping refining margins and subsequent run cuts, but firmer diesel prices helped the broader oil recovery last week.

"Crude oil posted its largest 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 oil rising to a two-month high," said ANZ commodity strategist Daniel Hynes, also noting airline-industry body IATA expects 10.5m flights in Q3 2024, with passenger numbers back above pre-COVID levels.

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