Oil: Distillate exports tighten market – ING

ING strategists Warren Patterson and Ewa Manthey note Oil prices remain under pressure, with ICE Brent trading below $80/bbl as markets focus on a potential US-Iran deal to reopen flows through the Strait of Hormuz. EIA data show modest net crude inventory declines, while strong US distillate exports and global disruptions in the Middle East and Russia keep refined product markets tight.

Brent pressured as products tighten

"ICE Brent continues to trade below $80/bbl as the market pins its hopes on a deal between the US and Iran. It would resume energy flows through the Strait of Hormuz. Iran signalled progress toward this goal, announcing that it has reached an agreement with Oman on new shipping arrangements for the strait, with a joint statement on the deal now being prepared."

"Iran has insisted that the agreement must proceed without interference from unnamed third parties — a formulation that, in practice, almost certainly refers to the US. The real hinge point now becomes the trajectory of US–Iran discussions, because meaningful progress there is essential before disrupted energy flows can realistically resume."

"EIA’s inventory report showed that US commercial crude oil inventories increased by 2.48m barrels over the last week, while the SPR fell by 2.84m barrels. This leaves total crude oil inventories to fall by a marginal 362k barrels. Crude oil imports increased by 515k b/d week-on-week, while exports grew by 218k b/d."

"Refined products saw further tightening over the week, with gasoline and distillate inventories falling by 1.64m barrels and 3.47m barrels, respectively. Strong exports are causing further tightening in the US distillates market. Exports rose 98k b/d WoW to a record 1.88m b/d."

"Globally, middle distillate markets are seeing significant tightness amid supply disruptions in the Middle East and Russia’s export ban on diesel."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)