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Crude Edging Lower After OPEC Rally Yesterday

OIL

Crude rallied yesterday on the news of an output cut by OPEC+ but is drifting off on oil demand concerns.

  • The OPEC cut of just 100kbpd in October does not materially changes the market balance and simply reverses the symbolic increase of 100kbpd agreed last month for September. The cut does however show willingness to react to falling prices to support stability while still maintaining their market share of production volumes.
    • Brent NOV 22 down -0.6% at 95.17$/bbl
    • WTI OCT 22 up 2.3% at 88.83$/bbl
    • Gasoil SEP 22 down -0.9% at 1131.5$/mt
    • WTI-Brent up 0.01$/bbl at -6.66$/bbl
  • Markets are trading lower today with concerns for an increase in Chinese lockdowns again with restrictions in parts of Sichuan and Guizhou provinces. The possibility of weaker global demand due to recession fears and lockdowns in China has been the main driver bringing crude back below 100$/bbl.
    • Brent NOV 22-DEC 22 down -0.11$/bbl at 1.23$/bbl
    • Brent DEC 22-DEC 23 down -0.32$/bbl at 10.45$/bbl
  • Crude time spreads followed the outright future market to rally on the OPEC cut but fall back slightly this morning. Various supply risks and ongoing demand concerns have created a volatile market with the Dec22-Dec23 spread swinging between 8.26$/bbl and 12.42$/bbl over the last week.
    • US 321 crack up 0.8$/bbl at 32.58$/bbl
    • US gasoline crack down -1.1$/bbl at 15.54$/bbl
    • US ULSD crack up 0.3$/bbl at 66.87$/bbl
  • Refining margins are holding relatively with the general trend of weaker gasoline spreads and stronger diesel spreads still in place.
Energy BulletsCommodities
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