Crude Edges Lower on China Demand Growth Uncertainty

Crude continues to pull back from a Brent high of nearly 76$/bbl early yesterday with pressure from concern for a potential US recession and softer growth in China.

• Brent JUL 23 down -0.8% at 74.31$/bbl
• WTI JUN 23 down -0.9% at 70.22$/bbl
• Gasoil JUN 23 down -0.5% at 676.5$/mt
• WTI-Brent down -0.02$/bbl at -4.08$/bbl
• Investment banks are split over China’s economic growth with some cutting forecasts due to weak April data but IEA yesterday still suggested China as the key driver of oil demand growth this year.
• OPEC production cuts and supply issues in Iraq and Canada are providing support while Russian seaborne output remains strong despite pledged production cuts since March.
  • Brent JUL 23-AUG 23 down -0.02$/bbl at 0.17$/bbl
  • Brent DEC 23-DEC 24 down -0.15$/bbl at 2.38$/bbl
• The crude forward curve remains in narrow backwardation with the potential for tighter market in H2 but time spread have fallen towards the low end of the range seen this year. The Brent Dec23-Dec24 spread is not far above the lows of the year of 1.6$/bbl. Demand concerns have pushed the prompt WTI spread just back into contango.
• US and European refining margins are edging higher with support from low inventory levels and potential for lower run rates. Throughput for oil refiners in Europe and the US will to be lower than previously expected in Q3 2023 after a drop in margins according to the IEA monthly oil report yesterday. Global crude throughput was however raised with growth led by China and India.
  • US gasoline crack up 0.4$/bbl at 33.9$/bbl
  • US ULSD crack down -0.1$/bbl at 28.22$/bbl