Crude prices corrected in the early morning, likely due to spillover effects of an Asian equity selloff, amid concerns over the Chinese housing market. Indeed, the dollar index, tracking a basket of currencies against the dollar, rose markedly on late Friday and remains elevated compared to previous months. For the crude markets, two factors are indicating that prices will remain supported, time spreads continued to climb, at 78 cents at the prompt, boosted by better sentiment, as long exposure from managed money increased by 20k. Furthermore, end-of-year gasoil cracks continue to be bid, with ICE gasoil cracks now at 9.3 $/b for the November delivery, which will increase east-west flows towards Europe. Better demand in Asia, boosted by Chinese demand from independent refiners, is boosting physical crude markets with Russian ESPO and Sokol grades at yearly highs against the Dubai benchmark.
The Fed meeting on Wednesday will likely bring volatility across risky asset classes, as the much talked about Fed tapering will likely be discussed. Sharp downward moves in the treasury yields and equity markets could have an adverse impact on crude markets.
Get more analysis and data with our Premium subscription
Ask for a free trial here
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.