Crude Futures and Spreads Surge After Surprise OPEC Cut

Crude markets have surged following the surprise announcement on Sunday that OPEC will cuts production by about 1.1mbpd from next month while Russia also said its production cut of 500kbpd would be extended until the end of the year. The largest OPEC cuts will be from Saudi Arabia of 500kbpd. Brent is up about 5% on the day although has drifted off from the initial high of 85.87$/bbl.

• Brent JUN 23 up 5.3% at 84.12$/bbl
• WTI MAY 23 up 5.2% at 79.63$/bbl
• Gasoil APR 23 up 4.6% at 798$/mt
• WTI-Brent down -0.36$/bbl at -4.45$/bbl
• OPEC+ were expected to maintain output steady with the monitoring committee meeting taking place today.
• Crude had seen support last week from supply disruption out of Iraqi Kurdistan but an agreement was reached yesterday to resume oil exports through Ceyhan in Turkey this week. Easing fears about the banking sector and lower than expected US inflation figures last week also provided price support.
  • Brent JUN 23-JUL 23 up 0.16$/bbl at 0.32$/bbl
  • Brent JUN 23-DEC 23 up 1.03$/bbl at 3.01$/bbl
  • Brent DEC 23-DEC 24 up 1.21$/bbl at 5.01$/bbl
• Crude backwardation has strengthened in line with the move in crude futures with Jun-Dec23 and Dec23-Dec24 jumping back up towards the higher end of the range seen so far this year. The WTI prompt spread has surged up to the highest since December at is now just below flat.
  • US gasoline crack down -0.1$/bbl at 36.65$/bbl
  • US ULSD crack down -0.3$/bbl at 33.77$/bbl
• Diesel and gasoline margins are holding relatively unchanged after drifting slightly lower last week. Signs of weak demand and the nearing end of the heavy US refinery maintenance season weighed on spreads while signs are that the strike disruption in France is easing.