Crude Holds Onto Gains on Possible Demand Boost From China and US

Crude markets are holding onto gains from yesterday with support from a potential broad package of stimulus measures under consideration in China after recent weaker data.

• Brent AUG 23 up 0.4% at 74.62$/bbl
• WTI JUL 23 up 0.3% at 69.64$/bbl
• Gasoil JUL 23 up 0.4% at 701$/mt
• WTI-Brent down -0.11$/bbl at -4.82$/bbl
• The latest monthly OPEC report yesterday showed a tighter oil market due to production cuts and a higher China oil demand growth forecast this year up 40kbpd to 840kbpd. China have issued the third batch of crude import quotas to independent refineries for 2023 of 62.28m tons.
• The May US CPI number showed roughly in line with expectation with a potential pause in the US Fed interest rate hikes expected at the FOMC meeting later today.
• The US DOE yesterday announced plans to purchase 12mbbls of oil to refill the depleted SPR including the 3m already scheduled for delivery in August and 3m planned for September.

• Brent AUG 23-SEP 23 down -0.02$/bbl at 0.06$/bbl
• Brent DEC 23-DEC 24 up 0.04$/bbl at 2.85$/bbl
• Crude time spreads have gained in line with the moves in the outright futures keeping the forward curve in narrow backwardation after the prompt Brent almost fell to parity yesterday. The WTI-Brent spread has fallen to almost the weakest since March to below -4.8$/bbl.
  • US gasoline crack up 0.6$/bbl at 37.94$/bbl
  • US ULSD crack up 0.2$/bbl at 31.38$/bbl
• US gasoline crack spreads remained steady yesterday while diesel cracks gained ground with API data suggesting builds in US inventories this week ahead for the EIA data later today. Support comes from refinery outages, the current low US inventories and summer driving season boost amid strong demand from India and a dip in Russian diesel exports.