Brent Recovering Back to 100$/bbl on Tight Fundamentals

A volatile trading day saw Brent fall as low as 94.76$/bbl before bouncing back up to 100$/bbl. The market reached the lowest levels since Feb before the start of the Ukraine conflict.

• US President Biden is due in Saudi Arabia today as part of his trip to the Middle East. Expectation of any significant increase in production from Saudi Arabia is low as the US are looking to ease global energy prices which are helping to drive high inflation and global economic growth concerns.
  • Brent SEP 22 up 0.9% at 99.95$/bbl
  • WTI AUG 22 up 0.6% at 96.32$/bbl
  • Gasoil AUG 22 up 3% at 1099.5$/mt
  • WTI-Brent down -0.33$/bbl at -6.56$/bbl
• Uncertainty over oil demand in China remains high with increasing covid cases potentially disrupting their recovery from lockdown restrictions earlier this year.
• Physical supply remains tight with prompt time spreads bouncing back up near recent peaks and longer dated spreads regaining some of the ground lost over the previous couple of days.
  • Brent SEP 22-OCT 22 up 0.13$/bbl at 3.92$/bbl
  • Brent DEC 22-DEC 23 up 0.5$/bbl at 9.17$/bbl
• Gasoline crack spreads are drifting lower and diesel spreads remain steady as data suggests that high fuel pump prices are starting to impact demand. The 4-week EIA gasoline demand data is trending lower during a time when the summer driving season normally pushes it higher.
  • US gasoline crack down -0.3$/bbl at 37.17$/bbl
  • US ULSD crack up 0.4$/bbl at 58.23$/bbl