Crude Extends Decline and Backwardation Softens

Crude falls again this morning with Brent breaking through the level just below 72$/bbl tested several times last week with focus on the global banking risks and the impact of oil demand. The potential for a another US Fed rate hike this week is adding to the downside concern. The decline is despite the rescue of Credit Suisse by UBS and the efforts by major central banks effort to boost liquidity.

• Brent MAY 23 down -2.7% at 71.03$/bbl
• WTI APR 23 down -2.9% at 64.81$/bbl
• Gasoil APR 23 down -2.7% at 754.75$/mt
• WTI-Brent up 0.17$/bbl at -5.91$/bbl
• US last week said it is still committed to replenishing the SPR but has not reacted immediately despite prices collapsing into the range they previously said would trigger purchases at below around 70$/bbl.
• OPEC+ will probably wait for financial markets to calm before deciding whether it needs to react to the oil price decline by cutting production. The group’s monitoring committee is scheduled to meet next on 3 April with the full OPEC+ meeting planned for June although could be brought forward if required.
• Goldman Sachs cut its Brent crude forecast on banking and recession fears with a revised 94$/bbl a barrel in the next 12 months down from 100$/bbl previously.
  • Brent MAY 23-JUN 23 down -0.1$/bbl at 0.1$/bbl
  • Brent JUN 23-DEC 23 down -0.43$/bbl at 0.74$/bbl
  • Brent DEC 23-DEC 24 down -0.72$/bbl at 1.12$/bbl
• Crude curve backwardation is following the trend lower with the prompt Brent spread falling down towards parity and the longer dated spreads the lowest since December 2021.
• Diesel and gasoline spreads are softer but still holding onto gains from last week with support from lower US inventories last week, the ongoing refinery maintenance season, a gradual rebound in US gasoline demand, French refinery strikes and the switch to summer grade gasoline.
  • US gasoline crack down -0.8$/bbl at 37.41$/bbl
  • US ULSD crack down -0.8$/bbl at 45.38$/bbl