Crude and Product Markets Edge Higher on US Optimism

Crude is again seeing some strength this morning with Brent trading about 3$/bbl above the lows from the start of this week on optimism that talks can result in a raising of the US debt ceiling and will prevent a default. Concern for global demand growth with uncertainty over future US Fed rate hikes have combined with a potential weaker than expected recovery in China are still providing downside pressure.

• Brent JUL 23 up 1% at 76.64$/bbl
• WTI JUN 23 up 1% at 72.55$/bbl
• Gasoil JUN 23 up 1.1% at 700.75$/mt
• WTI-Brent down -0.01$/bbl at -3.96$/bbl
• On the supply side ongoing disruptions in Iraq and Canada and OPEC production cuts are supportive but is offset by strong Russian seaborne exports despite pledged production cuts.
• Canadian wildfires are still a risk to oil sands output with at least 240kbpd of oil production in Alberta halted according to Rystad yesterday.
• Prompt crude time spreads are falling this week with levels to the lowest since April as soft demand and strong Russian exports offset near term tighter supplies. The WTI 1-2 spread is back into contango this week after holding in positive territory since mid April. The Dec23-Dec24 spreads have seen more support and are following the moves in the outright futures but remain near the low end of the range seen this year.
  • Brent JUL 23-AUG 23 up 0.01$/bbl at 0.07$/bbl
  • Brent DEC 23-DEC 24 up 0.18$/bbl at 2.77$/bbl
• Diesel and gasoline margins continue to recovery from the lows seen earlier this month with support from the slightly more positive outlook from the wider financial markets. Low US inventory levels and potential for lower run rates in Q3 are also supportive. Current weak demand and healthy supplies are keeping diesel cracks below start of year levels while gasoline is seeing some more support ahead of the summer driving season.
  • US gasoline crack up 0.1$/bbl at 36.54$/bbl
  • US ULSD crack up 0.1$/bbl at 29.21$/bbl