Oil futures: Prices retreat from highs, Brent holds above $90/b
Quantum Commodity Intelligence – Crude oil futures Monday were little changed amid choppy trading, as markets largely continued to consolidate the firm summer gains and support Brent prices above $90/b.
Front-month Nov23 ICE Brent futures were trading at $90.57/b (2000 GMT), compared to Friday's settle of $90.65/b but off from the earlier high of $91.45.
At the same time Oct23 NYMEX WTI was trading $87.23/b, versus Friday's settle of $87.51/b.
Supply-side cuts from Saudi Arabia and Russia remained the dominant factor for oil markets, contributing to falling inventories and in turn underpinning the rally.
"An extension had been expected but the fact they went for three months instead of the usual one month at a time surprised the market, and the political-driven decision lifted crude oil and fuel prices amid fresh buying from traders looking for continued upside momentum," said Ole S Hansen, Head of Commodity Strategy at Saxo Group, referencing the Saudi Arabia and Russia's decision to extend voluntary cuts until year-end.
"This artificially created tightness – note that OPEC spare capacity has risen above six million barrels, the highest since 2015 - is likely to worsen before softening from October and onwards when refinery demand for crude oil slows due to maintenance," added Hansen.
Prices were also given a lift after storms disrupted loading in Libya.
Demand
However, demand from China was seen holding up despite wider economic problems in the broader economy, as latest customs data revealed a strong rebound in August.
Meanwhile, diesel prices in Europe rallied to the highest levels in eight months, buoyed by potential shortfalls in global LNG due to strikes in Australia and Russia's refinery maintenance season reducing supplies of distillates.
ULSD cargoes as assessed by Quantum were assessed at $999.50/mt on Friday at 1630 London time, up $69/mt on the week and at a $12.25/mt premium over September LSGO.
The IEA and OPEC will both release monthly reports this week, with traders looking for any subtle shifts in demand outlooks for this year and next.
Among economic indicators this week, Wednesday's pivotal US consumer price report for August should give the next clues on US interest-rate policy, with gasoline prices likely to contribute to a significant increase on the CPI.
The European Central Bank (ECB) is also scheduled for its own meeting this week and although expected to keep interest rates steady, will be wary of energy inflation.
