Crude Drifts Lower on Demand Concern After US/Iran Progress Denied

Crude is drifting lower today to hold around levels seen trading last Friday just before the weekend OPEC meeting. Prices dropped as low as 73.8$/bbl late yesterday on Middle East news reports of a possible US/Iran deal which would bring fresh oil supply to the global market but rebounded when the reports were later denied by the US.

• Brent AUG 23 down -0.6% at 75.52$/bbl
• WTI JUL 23 down -0.6% at 70.86$/bbl
• Gasoil JUN 23 down -0.3% at 701.75$/mt
• WTI-Brent down -0.03$/bbl at -4.49$/bbl
• Global demand concerns in US and China still hang over the market despite the latest voluntary production cut of 1mbpd from Saudi Arabia in July.
• China's crude stockpiles hit a two year high in May according to Kpler with disappointing demand amid a weaker than expected economic recovery and spring refinery maintenance.
  • Brent AUG 23-SEP 23 down -0.02$/bbl at 0.1$/bbl
  • Brent DEC 23-DEC 24 down -0.08$/bbl at 3.52$/bbl
• Crude time spreads followed the move in the front month yesterday, but backwardation is stronger on the week with support from expectation of a market deficit in H2 2023 and the OPEC+ production cuts for 2024. Dec23-Dec24 is holding just below the highs of the week although the prompt WTI spread remains in contango with weak demand weighing on prices.
• US gasoline cracks have seen support this week with an outage to the FCC unit at the Bayway refinery adding to low inventories and optimism for a demand boost during the summer driven season. Phillips 66 Bayway refinery is assessing the possibility of patching a hotspot that caused the shutdown of its sole 145kbpd FCC to avoid a lengthy shutdown.
  • US gasoline crack up 0.2$/bbl at 38.45$/bbl
  • US ULSD crack up 0$/bbl at 29.07$/bbl