International oil prices shed more than 10% in October. Markets fell from the highs seen in September, as Saudi Arabia increased production and assured customers that it would plug any gaps caused by loss of Iranian oil to sanctions. UK transport fuel prices were broadly neutral, but Ice Brent futures ended the month at $75.04/bl, a loss of $7.68/bl on the month.
Opec crude production rose to an 11-month high of 32.8mn b/d in September, with Saudi production up by 100,000 b/d to over 10.5 mn b/d its highest level since 2016. Production rose still further in early October to 10.7 mn b/d, according to Saudi oil minister Khalid al-Falih. The minister added that there was still between 1-2mn b/d Saudi spare capacity.
As yet, there seems to be no fallout on energy markets from the tensions between Washington and Riyadh over the murder of Saudi journalist Jamal Khashoggi.
Non-Opec supply was also on the increase, as Russia boosted output to a post-Soviet era record of 11.3 mn b/d in September and could increase production to 11.5 mn b/d, Moscow says.
Participants in the Opec/non-Opec output pact will sign an accord to turn it into an open-ended agreement to continue to monitor and work together to stabilise the markets when they meet again on 7 December, al-Falih says.
On international spot Rotterdam barge markets, diesel prices were falling but at a six-year-high premium to gasoline.
On the UK forecourt, diesel prices have opened up a gap of over 6ppl to unleaded petrol and most commentators expect this to widen further this month. European gasoline prices were being hit by a lack of export opportunities to the US, where demand typically falls sharply going into the winter.
Sustained low water levels along the Rhine have diminished the inland German market’s access to supplies, lending further support to diesel prices. The shortages prompted Switzerland to release product from emergency stocks. However, the losses on crude should translate into lower retail prices for all transport fuels, and there appears to be plenty of scope for losses from current levels.