Crude Extends Decline as Demand Concern Offsets Supply Cuts

Crude is extending the decline after falling through the short term support level for Brent at 83.5$/bbl yesterday. The market is currently focused on weak demand and concern for a potential further US Fed rate hike and slowdown in US economy.

• Brent JUN 23 down -0.9% at 82.39$/bbl
• WTI JUN 23 down -1% at 78.48$/bbl
• Gasoil MAY 23 down -1.4% at 734$/mt
• WTI-Brent down -0.03$/bbl at -3.91$/bbl
• Supply issues continue to provide support with the current cuts to Russian production, OPEC cuts from next month and with ongoing disruption to Kurdish oil exports. The lack of approval from Turkey could delay the return of Kurdish supplies despite tentative signs of progress towards a restart earlier this week.
• Latest ship tracking data suggest Russia exports remain strong despite the production cuts casting doubt on the compliance with the cut target.
• A larger than expect draw in crude stocks in EIA data yesterday, a large increase in US refinery runs and a draw in Cushing stocks for the seventh consecutive week failed to halt the price decline.
  • Brent JUN 23-JUL 23 down -0.01$/bbl at 0.32$/bbl
  • Brent DEC 23-DEC 24 down -0.17$/bbl at 4.44$/bbl
• The crude time spreads are reflecting the moves in the outright futures with Jun23-Dec23 and Dec23-Dec24 both at the lowest since the start of the April.
• Gasoline cracks fell following the EIA data showing a stock build and drop in implied demand while diesel cracks continue to edge lower. Demand concerns are weighing on margins and assisted by the return of US refineries from maintenance and the gradual return of French refineries.
  • US gasoline crack down -0.3$/bbl at 31.56$/bbl
  • US ULSD crack down -0.1$/bbl at 28.03$/bbl