Oil slips after Europe agrees to tap diesel reserves

Oil prices rose more than $4 a barrel on Thursday, Oct. 1. Reuters reported that Chinese refiners had stopped exporting fuel, and The Wall Street Journal News Corp ↗ 0.64% reported that the United States was sending a third aircraft carrier and up to 10,000 more troops to the Middle East. Together, the reports raised fears that the world's shortage of refined fuel could get worse. Front-month December Brent crude settled at $$102.31$$ dollars a barrel, up 4.37%. U.S. West Texas Intermediate settled at $$92.87$$ dollars, up 2.71%.tbsnews+2

The rally faded on Friday. Brent settled slightly lower at $$102.25$$ dollars and WTI fell 1.9% to $$91.11$$ dollars, according to Reuters, after Europe agreed to draw on its diesel reserves.reuters

China keeps its fuel at home

Prices fell about 1% early on Thursday, then turned higher after Reuters reported that Chinese refiners had suspended oil product exports to places other than Hong Kong and Macau "until further notice from Beijing," citing four people briefed on the matter. State oil major PetroChina cancelled several gasoline and jet fuel shipments planned for October. Privately controlled Zhejiang Petrochemical scheduled no shipments during China's holiday week, which ends Oct. 7. The sources said it is unclear whether exports will resume after that.marketscreener

"The Chinese export ban suggests concerns about domestic product availability," said UBS ↗ 0.29% analyst Giovanni Staunovo. Hamad Hussain of Capital Economics said the curbs would matter less than the loss of Russian and Middle Eastern fuel exports, but called them "another source of stress on global fuel markets when supply is severely constrained". Russia has banned diesel exports through October after Ukrainian strikes on its refineries.zawya+1

More US forces head to the region

According to the Journal, Marine Corps ships and extra troops are expected to arrive by the end of November. The USS Theodore Roosevelt left San Diego on Sunday, Sept. 27, to join the USS George H.W. Bush and USS George Washington, which are already in the region. US officials have said President Donald Trump expects to resume bombing Iran after the November midterm elections. Before leaving on a campaign trip, Trump said of Iran: "They'll either sign a very fair deal, or they won't exist any longer".tbsnews+1

The buildup follows attacks on three Liberian-flagged tankers in the Strait of Hormuz earlier in the week. Washington also announced new sanctions on Iran's auto and rail industries.businesstoday+1

Europe moves to ease diesel shortage

Middle Eastern crude flows have mostly returned to prewar levels, but the market for diesel and other refined fuels is still tight. Reuters reported that the Trump administration told Germany and France to release emergency diesel stocks or risk a possible US ban on diesel exports. On Friday, reports of talks on releasing more diesel and crude pushed European gasoil futures down about 5% during the session.zawya+2