Crude Eases Back As US Recession Fears Offset Tighter Supplies

Crude is edging lower today amid fears of a US recession which could potentially limit global demand growth ahead of the widely expected 25bp US Fed rate hike this week. Last week saw prices supported by signs of tightening supplies with WTI on Friday closing at the highest since late April at over 77$/bbl.

• Brent SEP 23 down -0.4% at 80.77$/bbl
• WTI SEP 23 down -0.4% at 76.77$/bbl
• Gasoil AUG 23 up 1% at 803$/mt
• WTI-Brent down -0.12$/bbl at -4$/bbl
• Supplies from key exporting nations like Saudi are reducing following the earlier pledged cuts and exports from Russia are slipping after soaring volumes for much of this year. IEA Executive Director Fatih Birol at the weekend said the market could return to a deficit.
• Last week also saw support from growing optimism for Chinese economic stimulus support despite lacklustre GDP figures to start the week which weighed on crude.
  • Brent SEP 23-OCT 23 down -0.01$/bbl at 0.18$/bbl
  • Brent DEC 23-DEC 24 down -0.06$/bbl at 3.82$/bbl
• A tightening of supplies is reflected in the strengthening curve backwardation with the prompt WTI spread trading near the highest since November. The Brent and WTI Dec23-Dec24 spreads gained ground late last week to hold near the top of the range seen since April.
• Diesel and gasoline crack spread are trading just above the previous close after seeing strength throughout the month so far supported by low inventory levels and various refinery disruptions this month. Russia is however exporting fuels like diesel at near record pace.
  • US gasoline crack up 0.5$/bbl at 39.05$/bbl
  • US ULSD crack up 0.3$/bbl at 38.13$/bbl