Crude Edges Lower as Demand Concerns Offset OPEC Risks

Crude prices are drifting lower towards the lows seen yesterday as supply risks from the upcoming OPEC+ meeting are balanced against global demand concerns.

• Brent JUL 23 down -0.5% at 76.66$/bbl
• WTI JUL 23 down -0.3% at 72.46$/bbl
• Gasoil JUN 23 up 0% at 689.5$/mt
• WTI-Brent down -0.19$/bbl at -4.2$/bbl
• The US debt ceiling ‘deal in principle’ over the weekend has alleviated fears about a default but still must pass a divided US Congress before June 5. Despite the potential of avoiding disruption to financial markets the risk of further Fed rate hikes remains due to persistent inflation.
• The possibility of further OPEC+ production cuts is an upside risk after differing signs from Russia and Saudi Arabia ahead of the meeting on 3-4 June. Russia’s Deputy Prime Minister Novak last week said the group are unlikely to adjust targets, but Russia will engage in discussions with partners to determine what is best for the market.
  • Brent JUL 23-AUG 23 unchanged at -0.03$/bbl
  • Brent DEC 23-DEC 24 down -0.11$/bbl at 3.07$/bbl
• Most of the crude curve remains in narrow backwardation with prompt Brent and WTI spreads falling into contango late last week. Longer dated spreads are supported by the potential for a tighter market in the second half of this year driven by lower OPEC supplies, a demand recovery in China and low US petroleum inventory levels.
• Refining margins are steady with gasoline cracks holding onto gains seen earlier this month after the Memorial holiday marks the beginning of the US summer driving season. Diesel crack spreads remain low with weak demand concerns and recent increasing refinery runs rates.
  • US gasoline crack down -0.3$/bbl at 35.46$/bbl
  • US ULSD crack up 0.1$/bbl at 26.45$/bbl