Crude Drifts Lower on Demand Concerns

Brent traded in a fairly narrow range between 104$/bbl and 107$/bbl yesterday and is drifting down in that range this morning.

• Brent SEP 22 down -1.7% at 105.26$/bbl
• WTI AUG 22 down -1.9% at 102.08$/bbl
• Gasoil AUG 22 up 0.3% at 1113$/mt
• WTI-Brent down -0.14$/bbl at -6$/bbl
• Increasing Covid cases in China add uncertainty over oil demand with the potential for new lockdown restrictions as they continue with their zero covid policy. The possibility of weaker Chinese oil demand is combining with the ongoing concern for the global economy to add bearish pressure to the market. Prices are support by the tight physical supply with IEA's Birol saying “we might not yet have seen the worst” of the global energy crisis.
• Brent SEP 22-OCT 22 up 0.03$/bbl at 3.48$/bbl
• Brent DEC 22-DEC 23 down -0.51$/bbl at 10.21$/bbl
• The oil forward curves remain strongly backwardated with prompt time spreads still near recent highs. Longer dated spreads have drifted lower over the last month but remain well above start of the year levels.
• US gasoline crack down -0.7$/bbl at 40.84$/bbl
• US ULSD crack up 0.2$/bbl at 54.86$/bbl
• Refined product crack spreads are recovering from a fall last week with inventories still near record low levels. There are signs that high fuel prices are impacting demand but US gasoline pump prices have now fallen for nearly a full month which may help to support their summer driving season.