Crude Drifts Lower on China Uncertainty and US Fed in Focus

Crude is drifting lower with the latest data adding to uncertainty over the rate of recovery and future oil demand in China. Recent upside market moves have been limited with ongoing global economic concerns, weak future oil demand growth and robust Russian output outweighing tighter supplies from OPEC production cuts starting this month.

• Brent JUL 23 down -0.8% at 79.66$/bbl
• WTI JUN 23 down -1% at 76.03$/bbl
• Gasoil MAY 23 down -0.7% at 690$/mt
• WTI-Brent down -0.91$/bbl at -3.79$/bbl
• China’s manufacturing PMI in April fell to 49.2, below the breakeven 50-level, from 51.9, suggesting that fuel demand from China may not be as robust as expected following reopening.
• Recessionary concerns are still weighing on the market with the US Fed, the ECB and BOE all expected to raise rates at their upcoming meetings.
• Russian Deputy PM Novak last week said the OPEC has no plans for further cuts at present. Russian production cuts have so far not been reflected in weaker exports yet, keeping crude markets well supplied.
  • Brent JUL 23-AUG 23 unchanged at 0.41$/bbl
  • Brent DEC 23-DEC 24 down -0.17$/bbl at 3.51$/bbl
• Crude time spreads are holding steady after falling since mid April despite the potential for a tighter supplies in the second half of this year. June23-Dec23 and Dec23-Dec24 are trading near recent range lows although the prompt spread has recovered some ground after the expiry of the June futures contract last week.
• Diesel cracks spreads remain weak due to demand concern and ample supplies from refineries with gasoline seeing some more support ahead of the US driving season. Low margins are leading some Asian refiners to consider run cuts in the coming months.
  • US gasoline crack up 0.1$/bbl at 29.54$/bbl
  • US ULSD crack up 0.2$/bbl at 23.31$/bbl