Crude Edges Higher  on Prospects for Further China Policy Support

Crude markets are edging higher today after a small dip yesterday but still holding onto the gains seen last week with tighter supplies following Saudi production and Russian export cuts weighed against a lacklustre China recovery, central bank monetary tightening and resilient output from sanctioned countries.

• Brent SEP 23 up 0.4% at 77.97$/bbl
• WTI AUG 23 up 0.5% at 73.34$/bbl
• Gasoil JUL 23 down -0.8% at 749$/mt
• WTI-Brent down -0.01$/bbl at -4.73$/bbl
• Much of the macro focus today has been on prospects for further China policy support, particularly for the property segment of the economy after the suggestion of a further slowing recovery momentum from factory-gate prices yesterday falling at the fastest pace in over seven years in June.
• US CPI data due today with be in focus with the Fed on track to raise interest rates at the upcoming July meeting.

• Brent SEP 23-OCT 23 up 0.02$/bbl at 0.31$/bbl
• Brent DEC 23-DEC 24 up 0.14$/bbl at 3.51$/bbl
• Crude backwardation continues the strengthening trend since last June despite a slightly dip in spreads yesterday with support from OPEC+ member production cuts and potential China support measures. The Brent Sep-Oct spread has eased back from a peak of 0.4$/bbl yesterday after trading in contango in late June. The Dec23-Dec24 spread yesterday reached the highest since late April.
  • US gasoline crack down -0.1$/bbl at 34.88$/bbl
  • US ULSD crack up 0.1$/bbl at 34.24$/bbl
• Diesel and gasoline crack spreads are holding steady this morning with diesel spreads slowly gaining ground over the last week with support from supply disruption in Europe late last week. US Gulf Coast diesel exports to Europe so far this month are on track to hit the highest monthly rate since at least 2017. Russian refinery processing rates in early July have recovered to the highest level since early April to 5.65mbpd following the period of maintenance.