Oil prices have stabilised around the $60/bl mark after shrugging off the effects of the drone and cruise missile attacks on Saudi oil facilities on September 14.
Brent crude futures ended October at $60.23/bl, registering a negligible drop of $0.50/bl on the month, after briefly topping $62/bl. UK pump prices were off just over a penny per litre for both diesel and petrol.
Saudi Arabia and the US dialled down the bellicose rhetoric against Iran following the attacks, but additional US military aircraft and troops were sent to Saudi Arabia in October to bolster the kingdom’s defences and offer more offensive options.
The move was overshadowed by US President Trump’s decision to withdraw troops from northeast Syria. Analysts struggled to make sense of the bewildering contradictions and changes of direction in US foreign policy in the Middle East and the effect on stability in the region.
The international bulk markets for transport fuels were focused on the effects of International maritime Organization (IMO) legislation to reduce sulphur content in fuels used for shipping from January 2020.
Diesel supplies will be hit as refiners switch to producing extra marine gasoil to satisfy the new requirements. The IMO rules could also hit gasoline supply. The refinery feedstock for catalytic crackers that produce gasoline can also be used to blend with marine fuel oil to reduce the sulphur and may be diverted for just this purpose.
Typically, diesel prices are pushed higher going into the winter, but the price of diesel has actually dropped relative to crude oil and is significantly lower than this time last year. The dip in demand was attributed to a faltering world economy.
The US and China continue to slug it out in a trade war, despite both sides suggesting progress. China says that it has agreed with the US "to properly resolve their core concerns", while President Trump says "a big portion of the China deal" will be signed soon. Meanwhile, China’s manufacturing activity for the sixth consecutive month in October hit the lowest point since February. Prices could go lower unless this trend is reversed, or tensions reignite in the Middle East.