Crude Lower As China Demand Recover Optimism Fades

Crude oil has fallen back today after strong gains late last week on hopes of a relaxation of Chinese covid rules. Over the weekend the Chinese National Health Commission confirmed the current controls will remain in place with covid cases at a six month high. The market continues to weigh economic growth and recession fears against tight physical global supplies.

• Brent JAN 23 down -1.3% at 97.25$/bbl
• WTI DEC 22 down -1.6% at 91.14$/bbl
• Gasoil NOV 22 down -2.5% at 1086.75$/mt
• WTI-Brent up 0.05$/bbl at -7.22$/bbl
• The crude forward curve remains in strong backwardation with concerns for a reduction in Russian output and OPEC target production cuts adding to an already tight physical market. Flows from Russia to Europe should fall over the coming weeks with the EU sanctions and the G7 price cap on Russian oil output starting in less than a month. Prompt crude time spreads are however holding steady while longer dated spreads are following the China driven sentiment.
  • Brent JAN 23-FEB 23 down -0.04$/bbl at 1.63$/bbl
  • Brent JUN 23-DEC 23 down -0.11$/bbl at 4.69$/bbl
  • Brent DEC 23-DEC 24 down -0.3$/bbl at 6.01$/bbl
• Gasoline crack spreads are ticking up today after volatile trading last week saw prices higher on the week. Diesel crack spreads are edging lower following the moves in the flat price crude markets. Low stocks and, limited supplies continue to support diesel and gasoline cracks spreads despite current low gasoline demand and recession fears feeding lower oil demand growth.
  • US gasoline crack up 0.5$/bbl at 22.73$/bbl
  • US ULSD crack down -0.2$/bbl at 70.79$/bbl