Crude Extends Weekly Gains on Potential China Demand Recovery

Crude is extending the rally from the last week after better than expected economic data from China yseterday added to optimism for Chinese oil demand. Near term global economic growth and weak oil demand concerns continue to weigh on prices and are limiting any upside moves.

• Brent MAR 23 up 0.9% at 86.67$/bbl
• WTI FEB 23 up 1% at 81.02$/bbl
• Gasoil FEB 23 up 0.5% at 932$/mt
• WTI-Brent down -0.01$/bbl at -5.37$/bbl
• OPEC yesterday released the latest oil market report forcasting an unchanged 2023 oil demand outlook. Global oil demand is expected to grow by 2.2mbpd to reach 101.8mbpd. IEA are due to release the updated Oil Market Report today.
• Weak near term demand is keeping the prompt time spreads in contango with data suggesting below normal demand in US and China. The remainder of the crude curve is strongly backwardated with hope for a recovery in China and the global economy while concern remains for oil supplies following the EU ban on Russian oil products from 5 Feb. The impact of the EU ban on Russian seaborne crude is not yet clear with data this week suggesting supplies are finding alternative buyers away from Europe.

• Brent MAR 23-APR 23 up 0.02$/bbl at -0.15$/bbl
• Brent JUN 23-DEC 23 up 0.15$/bbl at 3.16$/bbl
• The upcoming EU ban is also supporting gasoline crack spreads with concern for naphtha and VGO blending supplies. Diesel upside moves have been more muted with Europe increasing supplies from Middle East, US and China while maintaining high Russian supplies while possible to boost inventories ahead of the ban.
  • US gasoline crack unchanged at 26.71$/bbl
  • US ULSD crack down -0.6$/bbl at 55.77$/bbl