Crude Drifts Lower on China Lockdowns and G7 Price Cap Plans

Crude falling back this morning as global oil demand concerns once again put downside pressure on markets after a short recovery higher late last week.

• Brent NOV 22 down -0.8% at 92.08$/bbl
• WTI OCT 22 down -1% at 85.88$/bbl
• Gasoil OCT 22 down -0.3% at 1056.75$/mt
• WTI-Brent down -0.13$/bbl at -6.6$/bbl
• Concerns for oil demand from the world’s largest oil importer, China persists with their covid lockdown restrictions potentially limiting consumption. Recession fears from a weaker global economic and central bank tightening to combat inflation are adding to the bearish sentiment.
• Upside supply risks from Russia, OPEC, Libya, and Iran are adding the market support and keeping the forward curve backwardated. Uncertainty remains over Russian supply late this year with the EU ban on Russian crude from Dec 5 and with the proposed G7 price cap on Russian oil. Over the weekend US Treasury issued potential compliance guidelines for the proposed cap on Russian oil. The aim is to implement the cap before the start of the EU ban.
  • Brent NOV 22-DEC 22 down -0.01$/bbl at 1.12$/bbl
  • Brent DEC 22-DEC 23 down -0.19$/bbl at 9$/bbl
• Time spreads are relatively stable this morning with support from the future supply uncertainty. Spreads have recovered after reaching the lowest since January early last week.
  • US 321 crack down -0.3$/bbl at 31.65$/bbl
  • US gasoline crack up 0.2$/bbl at 15.64$/bbl
  • US ULSD crack down -0.7$/bbl at 64.04$/bbl
• Gasoline and diesel crack spreads are also steady as weak demand data is balance against the low stocks and limited supply. Diesel spreads are still stronger than gasoline with inventories especially low and limited refinery capacity to cover the more resilient demand.