Crude Holding in Range on Supply and Demand Uncertainty

Brent is holding in a tight range between about 86$/bbl and 87.3$/bbl with uncertainty over Chinese demand, the upcoming OPEC+ production decision, and Russian supplies flowing the introduction of sanctions next week.

• Brent FEB 23 down -0.2% at 86.76$/bbl
• WTI JAN 23 down -0.2% at 80.38$/bbl
• Gasoil DEC 22 up 0.8% at 934.25$/mt
• OPEC+ are widely expected to keep production targets unchanged at the upcoming meeting on Dec 4 but lower prices, weak demand and front spreads in contango increase the risk of a reaction from the group. Even without any changes in targets OPEC+ production could still decline due to lower Russian output following the EU ban and the oil price cap from Dec 5.
• EU members have not yet agreed a price cap on Russian crude, but they are now discussing a level of 60$/bbl down from around 65-70$/bbl earlier this week. If it not yet clear if this level is low enough to get full agreement.
  • Brent FEB 23-MAR 23 unchanged at -0.02$/bbl
  • Brent JUN 23-DEC 23 up 0.07$/bbl at 2.71$/bbl
• The prompt crude time spreads are still trading negative but longer dated spreads have seen a recovery since a dip lower at the start of the week. Near term healthy supplies and weak demand have driven the front lower but concern for Russian supply and optimism for Chinese demand next year are adding to future support.
• US crack spreads are holding steady after EIA stock data showed a big draw in crude and build in products yesterday. Recovering refinery rates and weak demand contributed to the product stock build despite ongoing high exports.
  • US gasoline crack down -0.1$/bbl at 19.53$/bbl
  • US ULSD crack up 0.1$/bbl at 60.46$/bbl