Crude Falls With Global Economic Growth Concern Back in Focus

Near term global economic growth and weak oil demand concerns are back in focus after weaker than expected US retail sales data yesterday. Crude is trading down 1% today having rallied 8$/bbl in the previous week from 79.35$/bbl on 11 Jan.

• Brent MAR 23 down -0.8% at 84.34$/bbl
• WTI FEB 23 down -1.1% at 78.62$/bbl
• Gasoil FEB 23 down -2.6% at 928.5$/mt
• WTI-Brent down -0.2$/bbl at -5.33$/bbl
• A potential for recovery in oil demand this year had been supporting prices. IEA yesterday raised its global oil demand forecast by 1.9mbpd in 2023 to a record 101.7mbpd. Half the gain was attributed to China following the lift of its covid restrictions.
• Saudi Aramco CEO yesterday said he was confident demand will grow strongly this year as China reopens and with a recovery in the aviation market.
  • Brent MAR 23-APR 23 down -0.03$/bbl at -0.3$/bbl
  • Brent JUN 23-DEC 23 down -0.11$/bbl at 2.72$/bbl
• Crude time spreads followed the crude pull back late yesterday but most of the forward curve remains in strong backwardation. Spreads are supported by hope for a demand recovery this year and concern for Russian oil supplies following the EU ban on 5 Feb. Weak near term demand is keeping the prompt time spreads in contango with data suggesting below normal demand in US and China.
  • US gasoline crack up 0.1$/bbl at 26.6$/bbl
  • US ULSD crack down -0.1$/bbl at 57.18$/bbl
• Gasoline and diesel cracks spreads are holding gains since early this year with concern for tight supplies after the EU ban on Russian products. The expected missing supplies of diesel as well as naphtha and VGO for gasoline production is supporting product prices while Europe continues to boost inventories ahead of the ban.