Good morning. Oil prices have come under pressure, with ICE Brent settling more than 2% lower yesterday, and also trading weaker in early-morning trading today. As of 11:05 am Singapore time (0228 GMT), the ICE September Brent futures contract was down 74 cents/b (0.99%) from the previous close at $74.02/b, while the NYMEX August light sweet crude contract was down 70 cents/b (0.96%) at $72.43/b.
This follows reports yesterday that the UAE and Saudi Arabia have come to an agreement which will see OPEC+ increase output by 400Mbbls/d per month between August and December, as well as extending the OPEC+ deal through until the end of 2022 – it is currently due to expire in April. When talks initially broke down, this was because the UAE wanted its baseline used for production cuts increased. Reports suggest that they have got their way, with their baseline increased from around 3.2MMbbls/d to 3.65MMbbls/d. However, up until now, there has been no official statement from OPEC that a deal has been reached. The UAE energy minister has said that though talks have occurred, there is no agreement yet with OPEC+. Obviously, before we can see an agreement between all members, there would need to be another meeting.
The EIA’s weekly inventory report yesterday was also not very supportive, despite crude oil inventories falling by 7.9MMbbls over the last week – the seventh consecutive weekly decline. However, product inventories saw builds, with gasoline and distillate fuel oil inventories increasing by 1.04MMbbls and 3.66MMbbls. If we look at total stocks (oil and products), inventories actually increased by 2.49MMbbls. The data also showed a large reduction in implied demand over the week, with total product supplied falling by 2.24MMbbls/d. Gasoline and distillate fuel oil implied demand fell by 760Mbbls/d and 676Mbbls/d respectively.
Finally, OPEC will be releasing its monthly market report later today, which will include OPEC production numbers for June, along with the group’s outlook on the market for the rest of the year. (ING Economics)
INDEX: (MTD Estimates)
* Sing 380: 413.95
* Rott 3.5%: 399.2
* Sing 0.5%: 539.68
* Rott 0.5%: 526.10
OIL MARKET ROUND-UP:
* UAE Closes In on Oil Output Deal to Resolve Standoff With OPEC+
* China’s June Apparent Oil Demand Falls 1.7% Y/y
* West Africa’s Crude Sales Gain Pace as Europe, U.S. Buy Nigerian
* Korea oil: U.S. Crude Imports Climb to Highest Since April 2020
Rotterdam 3.5% INDIC
Aug21 391.00 / 393.00
Sep21 387.00 / 389.00
Oct21 382.75 / 384.75
Nov21 379.25 / 381.25
Dec21 376.00 / 378.00
Jan22 373.50 / 375.50
Q4-21 379.50 / 381.50
Q1-22 371.25 / 373.25
Q2-22 364.50 / 366.50
Q3-22 356.25 / 359.25
CAL22 360.25 / 363.25
Singapore 380 INDIC
Aug21 402.25 / 404.25
Sep21 400.00 / 402.00
Oct21 397.00 / 399.00
Nov21 394.25 / 396.25
Dec21 391.75 / 393.75
Jan22 389.50 / 391.50
Q4-21 394.25 / 396.25
Q1-22 387.50 / 389.50
Q2-22 381.25 / 383.25
Q3-22 374.25 / 377.25
CAL22 378.00 / 381.00
Rott VLSFO 0.5% INDIC
Aug21 509.25 / 514.25
Sep21 506.25 / 511.25
Oct21 503.25 / 508.25
Nov21 500.50 / 505.50
Dec21 497.75 / 502.75
Jan22 495.00 / 500.00
Q4-21 500.50 / 505.50
Q1-22 492.25 / 497.25
Q2-22 483.75 / 489.75
Q3-22 476.25 / 482.25
CAL22 480.00 / 486.00
Singapore VLSFO 0.5% INDIC
Aug21 528.00 / 533.00
Sep21 524.75 / 529.75
Oct21 521.50 / 526.50
Nov21 518.50 / 523.50
Dec21 515.75 / 520.75
Jan22 512.75 / 517.75
Q4-21 518.50 / 523.50
Q1-22 510.00 / 515.00
Q2-22 501.25 / 507.25
Q3-22 494.00 / 500.00
CAL22 498.00 / 504.00
Sing 10ppm GO INDIC
Aug21 78.99 / 79.13
Sep21 78.87 / 79.07
Oct21 78.66 / 78.86
Nov21 78.29 / 78.49
Dec21 77.92 / 78.12
Jan22 77.59 / 77.79
Q4-21 78.30 / 78.50
Q1-22 77.28 / 77.48
Q2-22 76.50 / 76.70
Q3-22 75.93 / 76.13
CAL22 76.12 / 76.52
Ice Gasoil Swap
Aug21 595.06 / 597.06
Sep21 595.85 / 597.85
Oct21 594.76 / 596.76
Nov21 592.13 / 594.13
Dec21 590.01 / 592.01
Jan22 588.52 / 590.52
Q4-21 592.30 / 594.30
Q1-22 587.23 / 589.23
Q2-22 581.03 / 583.03
Q3-22 586.61 / 588.61
CAL22 584.31 / 587.31
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