Crude Markets Extends Decline Ahead of Fed Meeting

Crude futures and time spreads are extending the decline from yesterday ahead of the Fed decision later today as stronger US inflation indicators are pressuring markets. Weakness yesterday followed a jump in the US dollar with the firmer-than-expected U.S. Q1 employment cost data providing the latest ‘hawkish’ input.

• Brent JUL 24 down 0.9% at 85.58$/bbl
• WTI JUN 24 down 1% at 81.13$/bbl
• Gasoil MAY 24 down 0.5% at 769.75$/mt
• WTI-Brent up 1.26$/bbl at -5.08$/bbl
• US secretary of state Blinken is in Israel for discussions with Netanyahu and other government officials. There is hope that a Gaza ceasefire deal can be agreed, the prospect of which has eroded oil’s geopolitical risk premium this week.
• Further drone strikes have been reported in Russia with a fire at an oil refinery in Ryazan and follow on from more attacks over the weekend.
• Bloomberg reported that API US crude inventories rose 4.91mbbls last week although the expectation from a survey suggests another EIA crude draw. The official weekly petroleum inventory stocks data is due to release later today.
  • Brent JUL 24-AUG 24 down 0.03$/bbl at 0.69$/bbl
  • Brent JUN 24-DEC 24 up 0.11$/bbl at 4.86$/bbl
• US diesel cracks have held relatively steady this week after the decline seen since February while the prompt Gasoil spread is trading in contango suggesting ample supplies. Muted demand after the end of the heating season and growing production capacity as refineries return from maintenance are weighing on prices.
  • US gasoline crack down 0.6$/bbl at 30.57$/bbl
  • US ULSD crack down 0$/bbl at 24.43$/bbl