Crude Edges Lower as Weak China Data Offsets US Debt Limit Progress

Crude edges lower on China growth concerns after weaker than expected manufacturing data and falling about 3$/bbl yesterday on US growth uncertainty.

• Brent AUG 23 down -0.3% at 73.52$/bbl
• WTI JUL 23 down -0.2% at 69.29$/bbl
• Gasoil JUN 23 down -1.6% at 661.25$/mt
• WTI-Brent up 0.08$/bbl at -4.04$/bbl
• China's manufacturing activity contracted faster than expected in May. The US has made progress towards agreeing a debt limit deal to prevent a default but concerns for the impact of persistent inflation on US Fed policy and a potential US recession are weighing on demand.
• Supply focus remains on the OPEC+ meeting at the weekend as some countries, such as Russia and Iraq, have suggested no changes to production targets are currently planned. The Saudi Arabi warning to market speculators last week provided some upside support.
  • Brent AUG 23-SEP 23 unchanged at 0.17$/bbl
  • Brent DEC 23-DEC 24 down -0.06$/bbl at 2.57$/bbl
• The prompt WTI time spread is back in contango with weak demand offsetting near term supply disruptions from Iraq and OPEC+ supply risks. Strong seaborne Russia exports continue to weigh on global oil prices. The remainder of the crude curves are still in narrow backwardation with spreads following the decline in futures yesterday.
• Oil product margins also drifted lower yesterday with gasoline easing back from the peak last week. Diesel crack spreads remain low with weak demand concerns and recent increasing refinery runs rates with gasoline seeing more support from an expected demand boost from the summer driving season and due to low inventories.
  • US gasoline crack down -0.1$/bbl at 34.67$/bbl
  • US ULSD crack down -0.3$/bbl at 25.69$/bbl