Crude prices supported despite a weak EIA report

Crude futures remained supported, at 78.5 $/b, despite rapidly falling time spreads, with front-month ICE Brent time spread now valued at 50 cents, from 80 cents prior in the month. The move was likely due to the rather disappointing EIA data release, where stocks were built by 10 mb in total and more than 4 mb for crude stocks. Indeed, US crude production recovered more rapidly than most market observers anticipated, growing back by 0.5 mb/d w/w. The sustained high long-dated prices, with 2022 and 2023 WTI strip markedly above most shale operators’ marginal cost, may have boosted investment decisions, as both rig counts and US frac spread count are both starting to grow more rapidly. The continued rise in Gasoil cracks, with European values rising to 10.7 $/b at the prompt, from 8 $/b in early September, has been a boon for crude markets, boosted by a rise in transportation demand and German heating oil restocking ahead of the winter. The dollar continued to strengthen, as risky assets all underperformed against US treasury yields, now at 1.54% for the 10-year maturity.