Crude Higher As China Considers Quarantine Reduction

Crude is pushing higher this morning as a sign of potential easing in China covid restrictions adds to the supply risks. Economic slowdown and recession fears continue to add downside pressure to the market.

• Brent DEC 22 up 0.5% at 92.91$/bbl
• WTI DEC 22 up 1.1% at 85.41$/bbl
• Gasoil NOV 22 up 0.8% at 1083.75$/mt
• WTI-Brent up 0.05$/bbl at -7.5$/bbl
• China is considering reducing the mandatory quarantine period for people entering the country as the market looks for signs that easing restrictions could lead to a recovery in oil demand.
• US yesterday announced the final 15mbbls withdrawal from the planned SPR release and have suggested a further release could be considered if required. No ban on product exports is expected at this time but the US is still considering all measures to help ease pressure on fuel prices.
  • Brent DEC 22-JAN 23 down -0.02$/bbl at 1.83$/bbl
  • Brent JAN 23-FEB 23 up 0.04$/bbl at 1.75$/bbl
  • Brent DEC 22-DEC 23 up 0.34$/bbl at 11.8$/bbl
• The crude forward curve remains in strong backwardation after time spreads extend the rally from yesterday. Supply risks come from the EU ban on Russian crude and G7 oil price cap combined with the OPEC+ target output reduction for Nov and Dec and other supply issue such as the delayed return of the Kashagan oil field.
  • US 321 crack up 0$/bbl at 41.3$/bbl
  • US gasoline crack up 1.5$/bbl at 25.84$/bbl
  • US ULSD crack down -0.2$/bbl at 73.69$/bbl
• Diesel cracks and Gasoil time spreads eased yesterday with the news of the end of the strike at one TotalEnergies refinery. Spreads are edging higher again today as industrial action has continued at three other refineries.