Crude Markets Soften Ahead of EIA Data and Fed Decision

Front month Brent is easing back from a high of 87.7$/bbl yesterday after a 6$/bbl rally over the previous week ahead of the latest weekly EIA stocks data and the Fed rate decision.

• Brent MAY 24 down 0.4% at 87.02$/bbl
• WTI MAY 24 down 0.5% at 82.34$/bbl
• Gasoil APR 24 down 0.6% at 846.5$/mt
• WTI-Brent down 0.03$/bbl at -4.68$/bbl
• The market is waiting for the Fed decision out later today. Rates are widely expected to remain unchanged this month but concerns that rate cuts will be delayed and could pressure demand have weighed on crude. The USD index is flat.
• The recent rally has been driven by geopolitical risk with an escalation of drone attacks on Russia refineries, as well as tighter supplies due to extended OPEC+ cuts and Improved global demand forecasts after positive China data earlier this week.
• Analysts estimate that drone attacks on Russian refineries have taken between 600kb/d and 900kb/d of capacity offline. The crude market has added a geopolitical risk premium with risks that further energy infrastructure is targeted and despite lower refining demand.
• EIA petroleum data due later today is expected to show another small crude draw this week after API data yesterday showed a 1.5mbbls draw according to Bloomberg.
  • Brent MAY 24-JUN 24 down 0.05$/bbl at 0.71$/bbl
  • Brent JUN 24-DEC 24 down 0.15$/bbl at 4.3$/bbl
• Crude time spreads are following the softer tone today to ease back from the high levels seen yesterday. Backwardation remains strong suggesting tighter market conditions. Jun24-Dec24 yesterday reached the highest since June 2022.
• Diesel and gasoline crack spreads have pulled back from the highs at the start of the week. EIA data today is expected to show a further recovery in US refinery utilisation with small inventory draws according to Bloomberg.
  • US gasoline crack up 0.2$/bbl at 32.35$/bbl
  • US ULSD crack down 0.2$/bbl at 32.19$/bbl