Crude Drifts Lower With Focus Still on China Demand

The crude oil market is again drifting lower today with concern for economic growth in China and the impact on global oil demand. Soft economic data from China this week has brought economic uncertainties back into focus despite robust apparent oil demand with the general strengthening of the US dollar adding to the downside pressure.

• Brent OCT 23 down -0.3% at 84.66$/bbl
• WTI SEP 23 down -0.3% at 80.74$/bbl
• Gasoil SEP 23 up 0.2% at 884.5$/mt
• WTI-Brent unchanged at -4.39$/bbl
• OPEC supply cuts, a reduction in Kazakhstan supply due to a power outage and a draw in US crude stocks reported by API last night are supportive.
• Global crude demand is relatively strong with physical prices seeing recent gains as refiners look for supplies after the Saudi production cuts. Strong refining margins are also supportive of crude demand.
• UBS has raised the year end Brent price forecast from 90$/bbl to 95$/bbl amid solid demand and with OPEC+ production close to a two year low.
  • Brent OCT 23-NOV 23 down -0.01$/bbl at 0.6$/bbl
  • Brent DEC 23-DEC 24 down -0.09$/bbl at 4.52$/bbl
• Backwardation remains strong amid the tight supply concerns although the prompt Brent time spread fell back from the highest since mid November yesterday as crude turned negative on the day. The longer term Dec23-Dec24 spreads are still holding just below the highest since April seen last week.
• US and European margins are edging higher today with ongoing support from low inventories and with sensitivity to any supply disruptions. API data last night gave little sign of any recovery in US stocks levels with a small draw for gasoline and small build for distillates.
  • US gasoline crack down -0.1$/bbl at 38.52$/bbl
  • US ULSD crack up 0.3$/bbl at 46.67$/bbl