Crude Maintaining Strength on Tighter Supplies

Crude is maintaining the recent strength driven by concern for tighter global supplies despite a small decline yesterday. The OPEC production cut starting in May, disrupted Iraqi Kurdistan oil flows, lower Russian exports, falling Cushing inventories and a weaker US dollar are all supporting prices. Upside moves are limited by ongoing concern for economic growth and global demand and with uncertainty over the rate of recovery in China.

• Brent JUN 23 up 0.3% at 86.33$/bbl
• WTI MAY 23 up 0.4% at 82.47$/bbl
• Gasoil MAY 23 down -0.9% at 775$/mt
• WTI-Brent up 0.06$/bbl at -3.98$/bbl
• The OPEC monthly oil market report released yesterday showed that the OPEC cuts in response to uncertainties surrounding demand and rising inventories will cause a widening supply shortfall. The report kept 2023 global oil demand growth forecasts unchanged with Chinese oil demand forecast to grow by almost 1mbpd in 2Q23 and by 0.8mbpd in 3Q23.
  • Brent JUN 23-JUL 23 down -0.01$/bbl at 0.4$/bbl
  • Brent DEC 23-DEC 24 down -0.04$/bbl at 5.44$/bbl
• Crude time spreads also softened yesterday after the expectation of tighter supplies supported the spreads up to the highest since November this week. The prompt Brent spreads is down from a high of 0.58$/bbl and Jun23-Dec23 pulled back from 4$/bbl to 3.35$/bbl.
  • US gasoline crack up 0$/bbl at 36.87$/bbl
  • US ULSD crack down -0.6$/bbl at 29.64$/bbl
• Diesel crack spreads continue to edge lower and are at the weakest since March 2022 after falling from a peak mid last month due to weak demand. Gasoline crack spreads are steady today with some strength ahead of the US driving season. Uncertainty remains over Russian oil output this year following the sanctions implemented in Feb.