Crude Lower with Uncertain Market and No Clear Direction

Crude market remains rangebound with Brent between 77.9$/bbl and 86.5$/bbl so far this week as high uncertainty in both demand and supply leaves the market with no clear direction. Near term demand concerns and recession risks are weighed against upside risks from Russian supply and a Chinese demand recovery this year.

• Brent MAR 23 down -0.5% at 79.67$/bbl
• WTI FEB 23 down -0.7% at 74.6$/bbl
• Gasoil JAN 23 up 1.3% at 895.25$/mt
• WTI-Brent down -0.17$/bbl at -4.82$/bbl
• A large build of 14.9mbbls in the API crude stock data released late yesterday has added to the downside pressures ahead of the updated EIA data later today.
• The prompt time spreads are still in contango suggesting ample near term supplies due to weak demand. Concerns for China demand due to high covid case numbers are adding to weak US demand data to keep near term spreads negative. Longer dated spreads remain largely unchanged in backwardation supported by Russian supply disruption and the possibility of a demand recovery later this year. The WTI 1-2 prompt spread yesterday traded down to -0.31$/bbl and the lowest since late 2020.
  • Brent MAR 23-APR 23 up 0.03$/bbl at -0.15$/bbl
  • Brent JUN 23-DEC 23 down -0.01$/bbl at 1.82$/bbl
• Product crack spreads are edging lower today after diesel saw a rally late yesterday. Upside supply risks are balanced against weak demand. Stocks are still below normal despite an increase in inventory levels over the last month. Further risks to global supplies are supportive with the upcoming EU ban on Russian products from 5 Feb.
  • US gasoline crack up 0.1$/bbl at 22.77$/bbl
  • US ULSD crack down -0.3$/bbl at 55.86$/bbl