Cracks Rally After EIA Demand Increase; Crude Steady

Brent is holding relatively steady after rallying following the release of the EIA inventory data yesterday.

• Record US exports and a dip in US production resulted in the unexpected crude draw which pushed flat price futures higher towards the end of the day. Underlying global economic concerns and a weak Chinese recovery from covid restrictions limited the upside moves.
• Earlier in the day the new OPEC Secretary General said the demand fears from China are “blown out of proportion” and that a supply squeeze was likely this year. He said OPEC spare capacity was “running on thin” ice at between 2-3mbpd.
  • Brent OCT 22 up 0.2% at 93.84$/bbl
  • WTI SEP 22 up 0.1% at 88.19$/bbl
  • Gasoil SEP 22 up 2.6% at 1068.25$/mt
  • WTI-Brent up 0.01$/bbl at -6.05$/bbl
• The recent bearish trend in the crude time spreads has taken a breather following OPEC comments and the EIA data. The forward curve backwardation has softened significantly over recent weeks as market sentiment over tight supply has eased. A rebound in Russian crude production combined with a slow increase from US and positive aims from various struggling OPEC members have combined with hopes for an Iranian nuclear agreement.
  • Brent OCT 22-NOV 22 down -0.02$/bbl at 0.61$/bbl
  • Brent DEC 22-DEC 23 up 0.02$/bbl at 6.64$/bbl
• Low supplies and stocks continue to drive a rally in diesel cracks spreads however concerns over demand are muting gasoline moves. EIA implied demand for both products showed a further recovery yesterday after the unseasonal dip in date earlier this month.
  • US 321 crack up 0.5$/bbl at 45.46$/bbl
  • US gasoline crack up 0.5$/bbl at 36$/bbl
  • US ULSD crack up 0.6$/bbl at 64.39$/bbl