Crude down over 2% today. Looking at the chart, 78.69 looks like the next level of support, which was the August 3 low and price is getting pretty close to it now. Next level down looks like 77.15, where the July 13th highs.

CRUDE OIL MARGINS EFFECTIVE 18TH AUGUST

Maintenance margin as follows (Initial Margins, ie non-member rates will be 110% of these)
Tier 1 / Sep23 increasing from $6200 to $6600 +$400
Tier 2 / Oct23 increasing from $6000 to $6400, +$400
Tier 3 / Nov23 increasing from $5700 to $6350, +$650
Tier 4 / Dec23 increasing from $5600 to $6100, +$500
...
Tier 16 / Dec24 increasing from $4100 to $4400, +$300
...

https://www.cmegroup.com/notices/clearing/2023/08/Chadv23-242.html

The dollar is strong and oil rallying. This makes me think supply and demand dynamics for oil are bullish. I think this because all things being equal oil should be selling off in a strong dollar environment. Maybe the supply cuts by OPEC are finally hitting the crude oil market, enough to overcome the weak Chinese inflation numbers.

Certainly an interesting situation.

From John Kemps "Best in Energy" today.
(For clarification Distillates includes Diesel, Gasoil, Heating Oil, Kerosene and Jet Fuel and hence is the other high-value products other than gasoline)

EUROPE’s distillate fuel oil inventories were -35 million barrels (-8% or -1.11 standard deviations) below the prior ten-year seasonal average at the end of August and the deficit has widened progressively from -9 million barrels (-2% or -0.33 standard deviations) at the end of January:

Slightly off topic but illustrating what the impact of the recent $20 jump in crude has to other industries...

This BQC newsletter is very Ags centric and this monthly update discusses the economics of rail transport. (For the non-Americans BNSF and CPKC are two of the larges North American Railroad companies).

From "Benson Quinn Commodities, Inc. Monthly Fuel Surcharge Update"* dated 19 Sep 23.

September 2023
Ultra Low Sulfur Diesel, formerly known as heating oil, futures have been rallying strongly for the past 2 months. This is finally being felt in railroad surcharges with BNSF surcharge for October going up 13-cents to 29-cents per mile from 16-cents per mile in September. CPKC surcharge for FH October is 47-cents per mile, 14-cents higher than August average of 33-cents per mile and up 4-cents from September average.

EIA raised its retail diesel price outlook raising Q3 average price 20-cents to $4.25 per gallon and Q4 average price 38-cents to $4.68 per gallon. 2024 outlook was also increased in its September STEO report by an average of 14-cents to $4.0725 per gallon.

* You can sign up for the free newsletter at https://bqci.us11.list-manage.com/subscribe?u=8d3c6770418c4ea65287a7768&id=49b0b81ee7 or click the link at https://mailchi.mp/adm/monthly-fuel-surcharge-update-jrrjsl94s9?e=4f76faf4c2

Well I am confused and very interested what is happening in the crude oil market the last week. The news is still referring to supply cuts as the main reason why oil is rallying.

I would have thought the strong dollar and weak bonds we would see the crude prices relax back into the mid 80s but this oil market has a mind of its own. Euro looking weak against the dollar trading about 1.06.

The demand picture has looked fairly steady for the past couple of weeks according to the news. Its 50/50 whether demand is going up or down in the news. At this point I would just be speculating as to what is happening.

It's a Cushing 'thing' not an 'oil thing'. Fundamentals for the general oil market are not nearly as tight as they are for Cushing, OK.

https://www.reuters.com/markets/commodities/us-oil-futures-surge-cushing-stocks-evaporate-kemp-2023-09-28/

SMCJB 

It's a Cushing 'thing' not an 'oil thing'. Fundamentals for the general oil market are not nearly as tight as they are for Cushing, OK. https://www.reuters.com/markets/commodities/us-oil-futures-surge-cushing-stocks-evaporate-kemp-2023-09-28/

Does this cause the spread between WTI and Brent to narrow?

Generally yes. I understand that the Arb to Europe is currently closed. Need to remember that WTI is now part of the Brent/BFOB/'whatever you want to call it' basket, but it's Houston WTI not Cushing WTI. When we are looking at Brent-WTI futures what we are really looking at is a combination of two different spreads, the Brent-Houston WTI spread PLUS the Houston-Cushing WTI Spread. There's actually a Houston WTI Future, but its listed on ICE and only trades Over the Counter and not electronically. CME have products like this Houston vs Screen monthly average product, but again only trades OTC. It didn't used to be like this. There was a time when Brent would come to the USGC, and be piped up to Cushing and was even delivered into the NYMEX CL Contract, which back then was called "Light Sweet Crude" before being renamed "WTI". And that concludes todays history lesson! :-)

US oil production now stands at 12.991 million barrels per day just shy of the record of 13 million barrels per day in Nov 2019. News sources saying it's still not enough to make up for the cuts by OPEC.