Crude Holding Gains on Speculation of OPEC Production Cut

Prices have rallied in recent days as the market speculates that OPEC will cut production targets again at the meeting on Dec 4 due to weaker demand and lower prices. Front month Brent crude has fallen 15% during the month from a high of 99$/bbl on Nov 7 due to economic slowdown and Chinese demand concerns.

• Brent FEB 23 up 0.6% at 84.79$/bbl
• WTI JAN 23 up 0.6% at 78.67$/bbl
• Gasoil DEC 22 up 1% at 901$/mt
• WTI-Brent down -0.25$/bbl at -5.05$/bbl
• EU members have yet to agree to the details of the Russian oil price cap with the G7 waiting on the outcome. A lower possible cap around 62$/bbl has been discussed but is still not low enough for countries such as Poland, Estonia, Lithuania. Russia have repeated stated they will not supply fuel to countries or companies who implement a price cap.
  • Brent FEB 23-MAR 23 up 0.02$/bbl at 0.03$/bbl
  • Brent JUN 23-DEC 23 up 0.07$/bbl at 2.44$/bbl
• Front spreads for Brent, WTI and even Gasoil have recently traded in contango reflecting healthy near term supplies. The remainder of the curve backwardation has softened significantly over last couple of weeks with concern for global demand and uncertainty over the impact of EU sanctions on Russian oil output.
  • US gasoline crack down -0.1$/bbl at 17.83$/bbl
  • US ULSD crack down -0.4$/bbl at 57.81$/bbl
• API stock data last night showed a big crude draw and oil product builds. Diesel and gasoline cracks spreads are steady after following crude and recovering ground yesterday. Demand concerns have been weighing on crack spreads but the speculation of easing restrictions in China could boost demand while global inventories remain low.