Crude Oil Brent (F) Futures Market News and Commentary
Oct WTI crude oil (CLU19) on Monday closed up by +1.33 (+2.437%), Oct Brent crude oil (CBV19) closed up by +1.10 (+1.88%), and Oct RBOB gasoline (RBU19) closed up by +0.0085 (+0.56%). The energy complex on Monday moved higher on an attack on a Saudi Arabian oil field and on reduced U.S./China trade tensions. Yemeni rebels launched a drone attack Monday on the Shaybah oil field in Saudi Arabia, although oil operations were not affected. U.S./China trade tensions eased on Monday, which fueled rallies in stock and commodity markets, after U.S. Commerce Secretary Ross said today that China's Huawei Technologies has been granted a 90-day extension to do business in the U.S. Also, White House economic director Kudlow on Sunday said that recent phone calls between U.S. and Chinese trade negotiators had been "positive." Another positive factor for crude prices is the outlook for fiscal stimulus from Germany, Europe's biggest economy, after a report Monday said the German government is preparing stimulus measures as a contingency for a recession and after German Finance Minister Scholz said Germany could spend an extra 50 billion euros ($55 billion) as fiscal stimulus. Tensions between Iran and the U.S. remain high, which is supportive for crude prices, after Iran on Monday warned the U.S. today against seizing its oil tanker that was released by Gibraltar Sunday night. That tanker had been seized by UK special forces in early July and had been impounded in Gibraltar on suspicion of carrying oil to Syria in violation of U.S. sanctions. The markets will now be watching to see if Iran releases the U.K.-flagged tanker that it seized in retaliation for the U.K.'s seizure of the Iranian tanker. Crude oil prices also have support on expectations for Wednesday's weekly EIA crude inventories to fall -1.5 million bbl. A bearish factor for crude was Monday's monthly report from the Bundesbank that warned Germany could be about to fall into recession as it said German output will remain "lackluster" in Q3 and "could continue to fall slightly." Q2 German GDP was reported at -0.1% q/q and another negative figure in Q3 would be the start of a technical recession in Germany, Europe's largest economy. The crack spread on Monday tumbled to a 6-month low, which is negative for crude prices since the low refining profit margin discourages refiners from purchasing crude oil to refine into gasoline. Last Wednesday's EIA data showed that U.S. crude oil inventories as of Aug 9 were +3.4% above the seasonal 5-year average, gasoline inventories were +3.6% above the 5-year average, and distillate inventories were -3.1% below the 5-year average. U.S. crude production was unchanged at 12.3 million bpd in the week of Aug 9, which was just slightly below May's record high of 12.4 million bpd.