Oil futures: Crude prices higher, Brent tops $85/b
Quantum Commodity Intelligence – Crude oil futures Tuesday were edging higher late in the session, although markets again faced mixed pricing signals for mush of the session in the form of tight suppliers offset by unconvincing global macroeconomics.
Front-month Oct23 ICE Brent futures were trading at $85.32/b (1805 GMT), compared to the day's range of $83.80-$85.48/b and Monday's settle of $84.42/b, while the more-liquid Nov23 contract was trading at $84.75/b.
At the same time Oct23 NYMEX WTI was trading $81.03/b versus Monday's settle of $80.10/b.
Speculation is pivoting towards Saudi Arabia maintaining its additional 1 million bpd cut for at least another month, although growing volumes from Iran and Venezuela in part counter this, while progress was said to be continuing on the reopening of the Iraq-Turkey crude export pipeline.
Investors are growing increasingly sceptical towards China's drip-feed of stimulus policies, with Monday's stock-market rally after Beijing cut levies on trading proving only short-lived.
"As China teeters on the brink of a recession, investors are growing curious about the Party's strategies to tackle this challenge. The prevailing lack of faith in China's capacity to orchestrate a revival stems from a combination of domestic economic challenges and external political pressures," said Stephen Innes, managing partner SPI Asset Management.
In another move, Beijing has issued a fresh batch of export quotas for refined oil products as the country looks to stimulate domestic consumption and boost sales aboard.
This will lift China's total annual export quota to around 41 million mt, up from 37.25 million mt last year.
Storm
Meanwhile, the US Gulf Coast is facing its first major hurricane of the season, albeit away from major offshore and onshore energy facilities, with Florida in the firing line.
Only Chevron so far has announced it will evacuate some offshore Louisiana staff as a precautionary measure due to Hurricane Idalia, but the company said production is not affected.
Florida itself faces a squeeze on petroleum supplies amid pre-storm buying, while coastal vessels shipping gasoline and diesel supplies to Florida face disruptions.
The Gulf Coast's LNG facilities are also located further west than Idalia's path, but Georgia's Cove Point LNG terminal could feel the backend effects after the storm passes over Florida.
Otherwise, focus is again back on the US rate-hike cycle and while the Fed may pause again next month, bets are increasing on another 25 bps move in Q4 after Fed Chair Jerome Powell said at Jackson Hole that central banks will have to "keep at it until the job is done."
"Eurozone core inflation has hardly declined from an exceptionally high level and in the US it also remains sticky, albeit to a slightly lesser extent," said BNP Paribas in its latest client note.
"In the coming quarters, economic growth in the US and the Eurozone should slow down and core inflation should move significantly lower," added the French bank.
