Crude Edges Lower as Market Volatility Eases

Crude is holding onto some of the gains seen yesterday as the financial markets stabilise after the rescue of Credit Suisse by UBS and the efforts by major central banks to boost liquidity and ahead of the US Fed rate decision tomorrow. The potential for another US Fed rate hike this week is adding to the downside concern.

• Brent MAY 23 down -1% at 73.08$/bbl
• WTI MAY 23 down -1% at 67.16$/bbl
• Gasoil APR 23 down -1.2% at 762.5$/mt
• WTI-Brent up 0.08$/bbl at -5.91$/bbl
• Upside market support could potentially come from any production cut from OPEC or any decision by US to refill SPR stocks however neither are expected in the short term.
• The second month Brent call-put skew has recovered from the lowest since Dec 2021 at -10.26% yesterday to -6.6% as the futures market has regained ground.
  • Brent MAY 23-JUN 23 down -0.06$/bbl at 0.19$/bbl
  • Brent JUN 23-DEC 23 down -0.15$/bbl at 0.96$/bbl
  • Brent DEC 23-DEC 24 down -0.08$/bbl at 1.92$/bbl
• The Brent curve has flattened however remains in backwardation with Russian supply uncertainty and China demand optimism for later this year still providing some support. The front of the WTI curve is trading in contango out until Jun23-Jul23 suggesting ample near term supplies with weak US demand and stronger than expected Russian oil output.
  • US gasoline crack up 0.1$/bbl at 38.9$/bbl
  • US ULSD crack down -0.7$/bbl at 44.48$/bbl
• Diesel margins are drifting off after rallying over the last week supported by supply concerns from refinery strikes in France. The US New York Harbour area is exporting diesel to Europe in the first substantial US exports to Europe since March 2022 as Europe seeks replacement supplies following the French strikes and Russia sanctions.