Crude Recovering on Easing Economic Concerns and Tighter Supplies

Crude extends a recovery from the lowest since December 2021 of around 71.50$/bbl on easing US recession fears although the markets remain cautious of further oil demand growth. The start of OPEC cuts this month and potential higher demand from China could still lead to tighter supplies this year. Goldman Sachs still expected a large deficit in the second half of the year supporting higher prices.

• Brent JUL 23 up 0.7% at 75.8$/bbl
• WTI JUN 23 up 0.7% at 71.85$/bbl
• Gasoil MAY 23 up 1.4% at 680.25$/mt
• WTI-Brent down -0.05$/bbl at -4.05$/bbl
• Stronger than expected Russia output is adding to the downside pressure with combined exports from both seaborne crude and pipeline flows increasing in March according to Bloomberg despite the pledge to cut production by 500kbpd. Russian refining is also not showing a significant decline with April down just 2% compared to March amid seasonal maintenance.
• Crude time spreads continue to follow the outright crude moves up from the lows seen mid last week. The curve remains in soft backwardation with spread levels well below the peak seen after the OPEC cut announcement in early April.
  • Brent JUL 23-AUG 23 up 0.05$/bbl at 0.26$/bbl
  • Brent DEC 23-DEC 24 up 0.09$/bbl at 3.05$/bbl
• Refining margins are seeing some support with diesel recovering from the lows at the start of the month on easing economic concerns. However, margins remain weak with US manufacturing and freight activity declining for six months running and reflected in falling distillates consumption. Refineries returning from outages and new global refining capacity have added to the bearish pressure although some Asian refiners could cut runs in the coming months if margins remain low.
  • US gasoline crack down 0$/bbl at 28.76$/bbl
  • US ULSD crack up 0$/bbl at 26.36$/bbl