Crude Drifting Lower as Economic Concern Offsets Lower Supply

Crude continues to gradually drift lower today with Brent pulling back from a peak of 87.4$/bbl on 12 April but above the lowest since the OPEC cut announcement of 83.5$/bbl.. Economic concerns for weaker industrial activity and reduced consumer spending and the potential for another US Fed rate hike are weighing on the market.

• Brent JUN 23 down -0.5% at 84.35$/bbl
• WTI MAY 23 down -0.5% at 80.44$/bbl
• Gasoil MAY 23 down -1.1% at 750.5$/mt
• WTI-Brent up 0.03$/bbl at -3.86$/bbl
• Robust Russian exports despite production cuts are also limiting upside while uncertainty remains over the speed of recovery in China after better than expected growth data and rising crude import data yesterday. Disruption to Kurdish and Nigerian exports are adding some price support.
• Crude time spreads are weaker and trading just above the lowest since the OPEC production cut announcement at the end of March seen yesterday. The prompt Brent spread has recovered from a low of 0.2$/bbl yesterday but is still down from a peak of 0.58$/bbl late last week. The WTI prompt spread is just in contango ahead of the WTI front month contract expiry on Thursday this week.
  • Brent JUN 23-JUL 23 down -0.02$/bbl at 0.3$/bbl
  • Brent DEC 23-DEC 24 down -0.13$/bbl at 4.87$/bbl
• Diesel and gasoline margins have drifted lower since 10 April with demand concerns weighing on spreads and assisted by the return of US refineries from maintenance and the end of strikes which halted French refineries. The Gasoil Sep-Oct spread moved into narrow contango this week suggesting ample supplies. Low inventories in the US and helping support gasoline ahead of the expected demand boost from the upcoming driving season.
  • US gasoline crack down -0.3$/bbl at 34.12$/bbl
  • US ULSD crack down -0.1$/bbl at 28.09$/bbl