Crude Holds Gains as OPEC Cuts Offset Demand Concerns

Front month crude futures are holding on gains from last week with Brent around 75$/bbl amid tighter supplies due to OPEC production cuts in H2 weighed against weak global demand concerns.

• Brent SEP 23 down -0.3% at 75.19$/bbl
• WTI AUG 23 down -0.3% at 70.4$/bbl
• Gasoil JUL 23 up 0.5% at 713$/mt
• WTI-Brent down -0.2$/bbl at -4.67$/bbl
• Saudi Arabia production cuts starting in July are considered likely to be extended into August while the US is starting to refill SPR from August. The market will be looking for indications of the future production levels when Energy Minster Prince Abdulaziz bin Salman addresses an industry conference on 5-6 July this week. Asian refiners expect Saudi Arabia to reduce prices for August deliveries according to Reuters.
• Further central bank rate hikes due to persistent inflation is a risk to global demand while factory activity growth in China slowed in June according to the Caixin PMI.
  • Brent SEP 23-OCT 23 up 0.03$/bbl at 0.14$/bbl
  • Brent DEC 23-DEC 24 unchanged at 2.73$/bbl
• The Brent forward curve is holding steady today and still in backwardation after spreads regained ground from lows mid last week. The Sep-Oct spread is positive after dipping into contango and the Dec23-Dec24 spread is largely unchanged on the week after falling to the lowest since Dec 2021.
  • US gasoline crack down -0.2$/bbl at 36.02$/bbl
  • US ULSD crack up 0.2$/bbl at 32.29$/bbl
• Diesel and gasoline crack spreads are steady today with weak demand concerns weighing on prices despite low inventories amid a steady start to the US driving season. Gasoline saw slightly more strength than diesel last week with ongoing US refinery outages. Global diesel supplies are recovering after mid June refinery disruption in Europe and with an expected increase in Russian diesel output as maintenance works come to an end.