OIL FUTURES: Crude tests six-week highs as fundamental outlooks tighten

New York — Crude oil futures settled higher Oct. 14 as fundamental outlooks turned more bullish amid reports of improved OPEC+ quota compliance and rising Chinese crude demand.

NYMEX November WTI settled 84 cents higher at $41.04/b and ICE December Brent was up 87 cents at $43.32/b.

Oil climbed in a late session rally following a Reuters report stating OPEC+ producers achieved 102% quota compliance in September. The latest S&P Global Platts survey Oct. 9 found compliance reached 99% last month, led by the Gulf states, but discipline from Russia and some African producers continued to slip.

Russian energy minister Alexander Novak said Oct. 14 that OPEC+ did not expect the second coronavirus wave to impede plans to increase oil output gradually.

The comments come on the heel of a call between Russian President Vladimir Putin and Saudi Arabia 's Crown Prince Mohammed bin Salman, where the pair underscored the necessity of continuing to cooperate within OPEC+, according to a statement posted on the Kremlin website late Oct. 13.

The call took place ahead of a key OPEC + monitoring committee, co-chaired by Saudi Arabia and Russia, which is scheduled to meet virtually Oct. 19, amid speculation that OPEC+ may not go ahead with easing its current 7.7 million b/d production cut in 2021.

Oil was already trending higher earlier in the session amid reports of rising Chinese crude demand. China's independent refineries' crude and bitumen blend imports were up 1.6% to 18.14 million mt, or 4.43 million b/d, in September, from a three-month low of 17.85 million mt in August, information collected by S&P Global Platts showed Oct. 14.

This is the fourth time that Chinese independent refineries' crude and bitumen imports have been over 18 million mt, having hit a record high 19.81 million mt, or 4.68 million b/d, in July, Platts data showed.

Rising Chinese demand helped push the benchmark cash Dubai spread to Dubai futures higher for a third consecutive day. December cash Dubai crude was assessed at a discount of 54 cents/b to same-month Dubai futures at the 4:30 pm (0830 GMT) Singapore close on Oct. 14, a two-week high and up from minus 75.5 cents/b the previous session, S&P Global Platts data showed.

OPEC in its monthly oil market report released Oct. 13 raised its global oil demand forecast for 2020 by 60,000 b/d to 90.29 million b/d citing growing Chinese crude appetite. However, it downgraded its forecast for 2021, expecting oil demand to total 96.84 million b/d, 80,000 b/d lower than its last forecast in September.

Refined product futures traced crude higher, but growing risks of a resurgent coronavirus pandemic capped the rally and weighed on crack spreads.

NYMEX November RBOB settled 1.44 cents higher at $1.1971/gal and November ULSD settled up 2.35 cents at $1.1925/gal.

In the US, a surge in new infections in the Midwest helped push the seven-day moving average of new cases to more than 51,000 on Oct 13, the highest since Aug. 16, according to data from The COVID Tracking Project.

The front-month ICE New York Harbor RBOB crack versus Brent was testing one-month lows at around $6.24/b midafternoon.