Crude Edges Up After Fall on Weak US and China Demand

Crude edges back higher after falling from a peak of about 75.5$/bbl yesterday after a large EIA crude stock build, indication of possible further rate hikes from US Fed and with more weaker data from China.

• Brent AUG 23 up 0.5% at 73.53$/bbl
• WTI JUL 23 up 0.5% at 68.6$/bbl
• Gasoil JUL 23 down -0.9% at 687.5$/mt
• WTI-Brent down -0.04$/bbl at -4.76$/bbl
• China's industrial output and retail sales growth showed below expectation in May with industrial output up 3.5% compared to 5.6% in April and retail sales rose 12.7% slowing from April's 18.4%. China’s apparent oil demand was lower than April at about 14.6mbpd in May but an increase of 17% on the year as the country released a large number of crude import quotas to independent refiners.
• The US Fed projected the potential for more rate hikes this year due to persistent inflation as demand concerns continue to limit market upside moves.
  • Brent AUG 23-SEP 23 unchanged at 0.03$/bbl
  • Brent DEC 23-DEC 24 unchanged at 2.68$/bbl
• EIA US crude weekly inventories yesterday showed a larger than expected build with Cushing stocks up to the highest since June 2021 adding further pressure to WTI prices. The WTI discount to Brent remains around -4.8$/bbl. The crude curve remains in narrow backwardation with concern for weak demand set against tighter supplies due to recent OPEC production cuts.
• Product demand data suggest a weak start to the US driving season but margins have seen support in the last week due to several refinery outages in US and Europe. Support also comes from low US inventories despite a build shown by EIA data yesterday.
  • US gasoline crack down 0$/bbl at 39.12$/bbl
  • US ULSD crack down -0.2$/bbl at 30.44$/bbl