Crude Extends Decline With Focus on US and China Growth

Crude is ending the week on a weaker note with focus on concern for growth in both the US and China weighing on potential future oil demand. The potential return of Iraqi Kurdish oil output and ongoing robust Russian exports are adding to the downside pressure while US plans to restock the SPR and the current OPEC production cuts are providing support.

• Brent JUL 23 down -0.7% at 74.46$/bbl
• WTI JUN 23 down -0.6% at 70.43$/bbl
• Gasoil JUN 23 down -1.8% at 671.25$/mt
• WTI-Brent up 0.03$/bbl at -4.01$/bbl
• Iraq is planning to resume flows from the northern Kurdish region through the port of Ceyhan on Saturday according to Oil Minister Hayan Abdel-Ghani yesterday. The restart would return approximately 450kbpd of crude oil to the market.
• The US plan to start buying oil to refill the SPR after the congress mandated sales end in June according to Energy Secretary Granholm yesterday.
• Canadian oil and gas producers have been restoring production after wildfires halted at least 234kbpd of output but Alberta faces an increase risk of wildfires due to rising temperatures over the weekend.
  • Brent JUL 23-AUG 23 down -0.01$/bbl at 0.21$/bbl
  • Brent DEC 23-DEC 24 down -0.16$/bbl at 2.43$/bbl
• The prompt Brent time spread saw some support yesterday due to the tighter near term supplies but the WTI spread moved lower and just into contango due to US demand concerns. The longer dated Dec23-Dec24 spreads are follow the moves in the futures prices.
• Diesel cracks yesterday lost some of the gains seen earlier this week with the global demand concerns, but low inventory levels and potential refinery runs cuts due to the low margins are still providing some support.
• Gasoline cracks continue to edge higher this week after stronger EIA demand data and an expected boost from the summer driving season helping to offset the economic risks.
  • US gasoline crack up 0.3$/bbl at 32.44$/bbl
  • US ULSD crack down -0.2$/bbl at 27.36$/bbl