Crude Drifts Lower on Uncertain China Economic Growth

Crude drifts lower to lose some of Friday’s gains as weak demand concerns continue to weigh on the market with no further detail yet regarding any possible China stimulus plans.

• OPEC production cuts, strong recent demand in India and US plans to start refilling strategic reserves were supportive of prices last week but upside was limited by US and China economic uncertainty.
  • Brent AUG 23 down -1.1% at 75.76$/bbl
  • WTI AUG 23 down -1.1% at 71.16$/bbl
  • Gasoil JUL 23 up 0.4% at 739.25$/mt
  • WTI-Brent up 0.06$/bbl at -4.59$/bbl
• A potential broad package of stimulus measures is under consideration in China after recent weaker data while the US Fed this week signalled the potential for more rate hikes this year due to persistent inflation.
• Traded volumes are likely to be low today due to the US holiday.
• The crude curve remains in narrow backwardation, but the prompt Brent spread on Friday briefly joined the WTI prompt spread in contango suggestion plenty of near term supply. The spread has today returned just positive while the De23-Dec24 spread is following the wider market slightly down on the day.
  • Brent AUG 23-SEP 23 down -0.01$/bbl at 0.02$/bbl
  • Brent DEC 23-DEC 24 down -0.19$/bbl at 2.99$/bbl
• Diesel spreads are steady today after seeing a strong rally last week driven by European refinery outages including at Shell’s Pernis refinery, TotalEnergies Gonfreville and Shell’s Godorf.
• Gasoline crack spreads are also holding the bullish trend with demand seeing a gradual seasonal increase at the start of the driving season. US inventories are still low despite recent builds helped by an increase in New York gasoline imports to the highest level since December 2021.
  • US gasoline crack down -0.4$/bbl at 40.51$/bbl
  • US ULSD crack down -0.1$/bbl at 35.55$/bbl