Crude Edges Higher As Market Considers Risk of OPEC+ Cut

Crude is edging higher today after recovering from a low of nearly 72$/bbl on Brent front month yesterday as the market assess the chances of a production cut at the OPEC+ meeting this weekend.

• Brent AUG 23 up 1.1% at 75.12$/bbl
• WTI JUL 23 up 1.1% at 70.87$/bbl
• Gasoil JUN 23 up 0.7% at 686.25$/mt
• WTI-Brent down -0.08$/bbl at -4.15$/bbl
• Earlier yesterday reports suggested OPEC+ is unlikely to deepen supply cuts at the meeting on 3-4 June in Vienna however suggested everything was still open to change.
• Latest notes from major banks do not expect any changes with OPEC first wanting to see the effect from voluntary cuts which started in May as well as Russia’s compliance with its pledged cuts of 500kbpd. Data yesterday suggested a significant drop in Saudi seaborne crude exports in May indicating that it is complying with its voluntary production cut of 500kbpd.
• Concerns for the impact of persistent inflation on US Fed policy and China's weaker manufacturing activity continue to weigh on demand. The US Senate yesterday passed legislation to suspend the debt ceiling and impose spending restraints to prevent a default.
  • Brent AUG 23-SEP 23 unchanged at 0.07$/bbl
  • Brent DEC 23-DEC 24 up 0.27$/bbl at 3.08$/bbl
• Near term crude times spreads have trended lower over the last week on weak demand and despite the ongoing halt to northern Iraq exports via Turkey. Longer dated spreads have seen some support in the last couple of days with the impact of current OPEC cuts starting to show and with the risk of further cuts.
• Gasoline cracks spreads fell to the lowest since 16 May yesterday but diesel edged higher as EIA US inventory data yesterday showed gasoline stocks just slightly lower but a small build in distillates. Gasoline four week implied demand showed an increase in line with the start of the summer driving season trend while distillate demand dipped slightly but holds onto much of the gains seen the previous week.
  • US gasoline crack down -0.3$/bbl at 32.23$/bbl
  • US ULSD crack down 0$/bbl at 27.13$/bbl