Crude Market Assess Geopolitical Risk and Demand Growth

Crude markets are stable so far today with geopolitical risk weighed against demand concerns as markets wait for Q1 US GDP and the Fed’s preferred inflation measure core PCE prices. A stronger print would likely weigh on crude as markets worry about the demand outlook.

• Brent JUN 24 up 0.2% at 88.21$/bbl
• WTI JUN 24 up 0.2% at 82.96$/bbl
• Gasoil MAY 24 up 0.3% at 783.5$/mt
• WTI-Brent up 0.01$/bbl at -5.24$/bbl
• The geopolitical risk premium as fallen from last week as Middle East tensions have eased but issues remain with Ukraine striking two Russian oil depots in western Russia and Houthis claiming they had targeted shipping off the Yemeni coast yesterday.
• An unexpected drop in US crude stocks in the weekly EIA data yesterday was supportive. Crude stocks fell driven by the Gulf Coast region due to strong exports and helped by an increase in refinery runs as facilities return from maintenance
• Kazakhstan has prepared a plan to compensate for exceeding its OPEC+ production targets in 2024, according to the Ministry of Energy while Iraq will maintain its 3.3mb/d crude export cap throughout 2024, Argus said.
• Reduced upside risks are reflected in the switch back to a near term crude put skew this week and as the US Oil Fund, biggest oil ETF, recording its largest recorded daily outflow, according to Bloomberg.
  • Brent JUN 24-JUL 24 up 0.01$/bbl at 0.99$/bbl
  • Brent JUN 24-DEC 24 up 0.05$/bbl at 4.59$/bbl
• Diesel cracks continued to soften yesterday and near the lowest since June 23 following a US distillates build and further weakness in US implied demand. Gasoline cracks rallied after a US inventory gasoline draw and despite also showing a drop in demand in the week to April 19.
  • US gasoline crack up 0.3$/bbl at 31.2$/bbl
  • US ULSD crack up 0$/bbl at 24.9$/bbl