Crude Holding Steady After Three Day Rally

Crude markets are holding steady after a three day rally on the back of short term supply outages adding to the potential for higher Chinese oil demand this year. Down side pressure comes from ongoing concern for the global economy and near term oil demand growth with central banks not yet at the peak of tightening. Higher Saudi Arabia OSP prices to Asia announced earlier this week and no current indication of a change in OPEC production policy are also supportive.

• Brent APR 23 up 0.1% at 85.21$/bbl
• WTI MAR 23 up 0.1% at 78.52$/bbl
• Gasoil FEB 23 up 1.3% at 847.25$/mt
• WTI-Brent down -0.05$/bbl at -6.46$/bbl
• US petroleum inventory data yesterday showed a build in crude and a larger than expected recovery in refinery utilisation leading to higher product inventories. Crude inventories reached the highest since June 2021 with the crude build supported by the highest crude production since April 2020 at 12.3mbpd.
  • Brent APR 23-MAY 23 up 0.02$/bbl at 0.41$/bbl
  • Brent JUN 23-DEC 23 up 0.02$/bbl at 2.98$/bbl
• Brent crude forward curve backwardation is strengthening this week with the prompt spread the highest since November. The market continues to watch for a negative impact from the latest EU and G7 sanctions on Russian oil output. The front of the WTI forward curve has followed the move higher but remains in contango due to weak near term demand.
• Product crack spreads are also weighed down by demand concerns. US data yesterday showed distillate and gasoline four week average implied demand showing no signs of recovery with both holding steady near the bottom of the five year range.
  • US gasoline crack up 0.6$/bbl at 25.62$/bbl
  • US ULSD crack up 0.4$/bbl at 43.77$/bbl