Crude Drifts Lower With Uncertainty over Oil Demand and Russian Output

Crude has eased back as concerns for economic growth and potential further central bank tightening are weighed tighter supply. On Friday crude rallied in response to comments from Russia’s Novak says that Russia plans to cut March output by 500kbpd.

• Brent APR 23 down -0.8% at 85.66$/bbl
• WTI MAR 23 down -1% at 78.94$/bbl
• Gasoil MAR 23 down -1% at 827.75$/mt
• WTI-Brent up 0.03$/bbl at -6.49$/bbl
• Reports suggest OPEC+ plans no action following the seemingly unilateral cut to production announced by Russia in response to western sanctions. Other short term supply distributions from Turkey, Norway and Kazakhstan had already supported a rally of Brent crude up from below 80$/bbl at the start of last week. Most of these outages have now resumed operations.
  • Brent APR 23-MAY 23 down -0.04$/bbl at 0.36$/bbl
  • Brent JUN 23-DEC 23 down -0.19$/bbl at 2.99$/bbl
• Crude backwardation was also supported last week from the supplies concerns but today spreads continue to ease back from the peak on Friday due to the end of the short term supply issues. The near term spreads had rallied more than longer dated spreads with the prompt spread trading just below the highest since November.
• Diesel and gasoline crack spreads are finding some support after gradually falling since mid January. Spreads declined due to weak demand, building distillate storage levels in Europe and reducing concern for tight supply due to higher than expected Russian output.
  • US gasoline crack up 0.7$/bbl at 25.84$/bbl
  • US ULSD crack down -0.2$/bbl at 40.54$/bbl