Crude Edges Higher but Demand Concerns Limit Upside Moves

Crude is holding slightly up on the day after volatile trading yesterday saw Brent front month bounce between 77.7$/bbl and 79.8$/bbl. Weak demand concerns still weigh on the market with uncertainty over the impact of high covid case numbers in China and the global economic slowdown.

• Brent MAR 23 up 0.2% at 78.85$/bbl
• WTI FEB 23 up 0.2% at 73.85$/bbl
• Gasoil JAN 23 down -0.3% at 858$/mt
• WTI-Brent down -0.03$/bbl at -4.72$/bbl
• Reports this morning that China might ease property controls are providing some optimism over future Chinese demand and support to prices.
• Concern for Russian exports following sanctions may also provide some support while a further fall in demand and prices may increase the chance of a reaction from OPEC+. The next JMMC meeting is due at the start of Feb.
  • Brent MAR 23-APR 23 down -0.01$/bbl at -0.14$/bbl
  • Brent JUN 23-DEC 23 up 0.02$/bbl at 1.77$/bbl
• The front Brent and WTI time spreads are still negative suggesting ample near term supplies. The WTI spread was driven lower partly due to the cold weather disruption at the end of December and with the Keystone pipeline outage. The curve structure is holding relatively steady so far today.
  • US gasoline crack up 0.4$/bbl at 21.9$/bbl
  • US ULSD crack down -0.4$/bbl at 50.87$/bbl
• Diesel and gasoline spreads eased back yesterday as EIA data showed another drop in US demand following the winter disruption to refineries. Refinery utilisation fell by over 12% but product stocks only showed a small decline so the impact could be reflected further in data next week.