Crude Edges Higher With China Demand Weighed Against Economic Growth

Crude is rallying with the impact of inflationary pressures on oil demand weighed against Chinese growth optimism and supply concerns with the planned production cut from Russia in March. Front month Brent is up from a low of around 84$/bbl yesterday.

• Brent APR 23 up 0.6% at 85.93$/bbl
• WTI MAR 23 up 0.9% at 79.27$/bbl
• Gasoil MAR 23 up 1.5% at 842.25$/mt
• WTI-Brent up 0.06$/bbl at -6.44$/bbl
• Chinese state refiners are increasing crude purchases and run rates as they look to buy more cheap Russian to boost refining margins. Airline data is showing an increased demand for transportation fuel in China with rebounding passenger loads.
• The prompt Brent spread is following the move in the front month back up to 0.37$/bbl from a low of 0.25$/bbl yesterday. The prompt Gasoil spread is holding around 10$/mt this week as the market waits for further visibility on diesel supply concerns. The cut to Russian crude production for March has raised the risk of a cut to product supplies despite recent healthy output.
  • Brent APR 23-MAY 23 up 0.05$/bbl at 0.38$/bbl
  • Brent JUN 23-DEC 23 up 0.07$/bbl at 2.87$/bbl
• IEA monthly report yesterday showed an increased global oil demand forecast which is set to rise by 2mbpd in 2023 to 101.9mbpd as the reopening of China’s borders will boost air traffic. It highlighted the impact on Russia’s product exports will be a key factor when it comes to meeting that demand growth.

• Gasoline and diesel cracks eased lower again yesterday after the EIA showed US implied demand remained relatively unchanged with distillates demand falling back below the five year range. Crude stocks showed a large build as refinery runs fell with output impacted by the strong maintenance season.
  • US gasoline crack up 0$/bbl at 26.01$/bbl
  • US ULSD crack up 1$/bbl at 41.81$/bbl