Crude Market Balancing Tighter Supplies Against Economic Concern

Front month crude is holding steady today after gaining ground in trading yesterday. Brent is hovering just above the levels seen last week prior to the OPEC+ meeting but below the spike higher on Monday in reaction to the Saudi production cuts.

• Brent AUG 23 down -0.2% at 76.83$/bbl
• WTI JUL 23 down -0.1% at 72.45$/bbl
• Gasoil JUN 23 down -0.2% at 709$/mt
• WTI-Brent down -0.06$/bbl at -4.29$/bbl
• The support for crude driven by tighter supply is currently offset up by US and China demand concerns. Weaker demand in the US is limiting upside moves with concern for the impact of persistent inflation on future central bank policy.
• Uncertainty over compliance with voluntary production cuts is also limiting upside moves with Russian seaborne output still strong despite the pledged cut since March.
• EIA inventory data was mildly bullish yesterday with a draw in crude inventories driven by a large increase in refinery utilisation while US crude production climbs to the highest since April 2020.
  • Brent AUG 23-SEP 23 up 0.02$/bbl at 0.13$/bbl
  • Brent DEC 23-DEC 24 up 0.01$/bbl at 3.69$/bbl
• Crude time spread eased lower late yesterday after Dec23-Dec24 earlier in the day reached the highest since mid April as OPEC production cuts for 2024 support the curve backwardation.
• US diesel and gasoline cracks rallied late yesterday with inventories still low despite the builds seen this week. Four week average implied demand for gasoline remained steady to hold higher than last year but below 2019 levels while distillates implied demand fell again despite a small weekly gain.
  • US gasoline crack up 0.5$/bbl at 39.07$/bbl
  • US ULSD crack up 0.1$/bbl at 28.59$/bbl