Crude Rallies as Supply Issues Resurface

Crude recovered ground yesterday as issues with oil production from Libya and Ecuador highlighted the uncertainty of the supply situation.

• Brent AUG 22 up 1.5% at 116.81$/bbl
• WTI AUG 22 up 1.4% at 111.13$/bbl
• Gasoil JUL 22 up 0.7% at 1271.75$/mt
• WTI-Brent down -0.16$/bbl at -5.72$/bbl

• Libya’s state oil company said they may have to halt exports from the Gulf of Sirte in the next 3 days due to political protests. Ecuador could halt production completely due to anti-government protests. Libya has recently been producing approximately 600kbpd which is half of start of year levels and Ecuador was producing 520kbpd before the protests. OPEC are due to meet later this week but any significant increase in supply seems unlikely. Many members are still struggling to meet quota targets and Saudi Arabia and UAE would need to break the agreement to increase production.

• Limited refining capacity has kept refined product crack spreads strong but diesel spreads fell back several dollars yesterday to lose some gains from earlier in the month. Supply remains tight and stocks are low but concerns for the impact of economic risks and high pump prices on demand may be starting to add some downward pressure.
• US gasoline crack up 0.5$/bbl at 48.37$/bbl
• US ULSD crack up 0.2$/bbl at 64.89$/bbl
• Gasoline-Brent up 1$/bbl at 45.14$/bbl
• Gasoil-Brent up 1.2$/bbl at 49.14$/bbl
• Time spreads rallied yesterday as the crude supply issues highlighted the tightness of the market. The Sep-Oct Brent spread has rallied from about 2.4$/bbl to 3.1$/bbl over the last week.
• Brent AUG 22-SEP 22 up 0.12$/bbl at 4.23$/bbl
• Brent DEC 22-DEC 23 up 0.39$/bbl at 12.65$/bbl