Crude Declines Again Driven by Economic Slowdown Fears

Crude has resumed the downward trend this morning in place since the OPEC+ meeting and latest Saudi production cut announcement on 4 June. Concern for weak global demand with an economic slowdown in US and a slower than expected recovery in China is combining with robust Russian seaborne exports to weigh on prices.

• Brent AUG 23 down -0.9% at 74.12$/bbl
• WTI JUL 23 down -0.9% at 69.55$/bbl
• Gasoil JUL 23 down -2.2% at 682$/mt
• WTI-Brent up 0.12$/bbl at -4.4$/bbl
• Goldman Sachs has cut its year-end Brent forecast to 86/bbl, the third downgrade in 6 months on rising supplies from sanctioned countries and recession fears.
• Support for demand may be supported if the US Fed pause the interest rate increases seen in the last year at the central bank meeting later this week.
• Crude time spreads have maintained stronger that flat price futures since the OPEC meeting however the Dec23-Dec24 has now fallen back to the levels seen just before the latest production cut announcement. The prompt spreads are weak with Brent just above parity and WTI still in contango.
  • Brent AUG 23-SEP 23 down -0.01$/bbl at 0.04$/bbl
  • Brent DEC 23-DEC 24 down -0.11$/bbl at 3.08$/bbl
• Diesel and gasoline crack spreads are holding onto gains seen last week driven by an outage to one of two CDU’s at Shell’s Pernis refinery and with line repairs on the Phillips 66 Bayway refinery 145kbpd FCC expected to last three weeks. Strong demand from India and a dip in Russian diesel exports are also supporting global product margins with a potential boost for demand from the start of the US summer driving season.
  • US gasoline crack down -0.2$/bbl at 38.59$/bbl
  • US ULSD crack down -0.1$/bbl at 28.91$/bbl