Crude Edges Back Up Supported by Supply Risks

Crude continues to tick higher after a rally yesterday to bring Brent back to levels seen on Tuesday. The risk to demand from an economic slowdown is balanced against optimism for a recovery in demand in China with the market still sensitive to any supply disruptions.

• Brent APR 23 up 0.9% at 82.94$/bbl
• WTI APR 23 up 0.9% at 76.05$/bbl
• Gasoil MAR 23 up 2.2% at 800.5$/mt
• WTI-Brent down -0.03$/bbl at -6.89$/bbl
• Crude rallied yesterday on news of a force majeure on oil exports from Ecuador with an erosion risk to its major pipelines and construction of new bypass pipelines to take 7 to 10 days.
• EIA data released yesterday showed a larger than expected US crude stock build and another drop in refinery utilisation. Gasoline demand showed a small recovery, but diesel demand remains below the five year range.
  • Brent APR 23-MAY 23 up 0.03$/bbl at 0.29$/bbl
  • Brent JUN 23-DEC 23 up 0.15$/bbl at 2.43$/bbl
• WTI is still slightly weaker than Brent with concern for the US economy, small SPR releases this year and higher Russian supply risks for Europe than US. The WTI-Brent spread has drifted out to around -6.9$/bbl with the prompt WTI time spread still in contango. The remainder of the crude forward curves are in backwardation supported by Russian supply risks and demand optimism for later this year.
  • US gasoline crack up 0.1$/bbl at 33.44$/bbl
  • US ULSD crack up 0.4$/bbl at 38.39$/bbl
• Refined product crack spreads are steady today after gasoline saw small gains following the EIA data yesterday. Weak demand has weighed on the spreads, but support comes from the heavy US refinery maintenance season and risk of a drop in Russian oil output.