Crude Holding Previous Gains on Supply Issues & SPR Refill Plans

Crude markets are holding onto gains from yesterday supported by short term supply disruptions in Iraq and Canada and OPEC cuts offsetting ongoing global demand fears. Downside risks from a potential US recession and softer growth in China are limiting any upside moves although data overnight showed China’s refineries maintained near record rates last month.

• Brent JUL 23 up 0% at 75.24$/bbl
• WTI JUN 23 unchanged at 71.11$/bbl
• Gasoil JUN 23 up 0.9% at 685.5$/mt
• WTI-Brent up 0.01$/bbl at -4.16$/bbl
• US plans to start the SPR refill with up to 3mbbls in August have also provided some price support.
• Further Canadian wildfires are still a risk to output after a heat wave resulted in a resurgence of wildfires after production had been gradually returning following outages last week.
• Crude exports from Iraq’s northern fields of approximately 470kbpd have yet to restart despite Iraq’s desire to resume flows.
• Iraq does not expect OPEC+ to make further cuts to oil output at its next meeting on 3-4 June.
• Russian seaborne crude exports have shown further strength despite claims of production cuts although they have cut processing rates in May amid seasonal refinery maintenance.
  • Brent JUL 23-AUG 23 unchanged at 0.21$/bbl
  • Brent DEC 23-DEC 24 up 0.04$/bbl at 2.66$/bbl
• Crude time spreads are trading near previous close levels and still near the recent range lows. The prompt spreads have seen some support with WTI just holding onto a narrow backwardation. The WTI-Brent spread is drifting wider with concern for US demand and after a recent halt to the declining trend in Cushing inventory levels.
• Diesel and gasoline cracks rallied yesterday but margins remain weak with the global demand concerns weighed against low US inventory levels, an expected boost from the summer driving season and potential refinery runs cuts due to the low margins.
  • US gasoline crack down -0.1$/bbl at 32.46$/bbl
  • US ULSD crack up 0.1$/bbl at 28.84$/bbl