Crude Recovers on Optimism for Future Chinese Demand

MNI (London) - Crude recovering on optimism for Chinese demand after volatile trading yesterday saw the Brent price fall from 88.3$/bbl to 82.65$/bbl due to a stronger US dollar and concerns for the impact of the economic slowdown on demand global.

• Brent FEB 23 up 1% at 83.53$/bbl
• WTI JAN 23 up 0.9% at 77.61$/bbl
• Gasoil DEC 22 down -2.4% at 872.25$/mt
• WTI-Brent down -0.2$/bbl at -5.74$/bbl
• The easing of some testing requirements in Beijing is the latest sign of a relaxation in covid restrictions in China which are boosting the hope for a recovery in oil demand.
• Prices are swinging on uncertainty over Chinese demand and Russia supplies following the start of the EU ban and G7 price cap. It is not yet clear if all the missing Russia output to EU will find alternative buyers but up until now supplies have remained higher than expected with increased supplies to Asia.
• The 60$ cap is above the current Urals price but some disruption to flows is possible with some tankers already blocked by a rule in Turkey to provide proof of insurance when navigating shipping straits.
  • Brent FEB 23-MAR 23 down -0.04$/bbl at -0.02$/bbl
  • Brent JUN 23-DEC 23 up 0.17$/bbl at 1.79$/bbl
• Prompt time spreads are holding near to parity while the remainder of the curve continues to soften but is still in backwardation.
• Demand concerns are also weighing on diesel and gasoline spreads as refined product markets followed the crude move lower yesterday.
  • US gasoline crack up 0.3$/bbl at 15.83$/bbl
  • US ULSD crack up 0.6$/bbl at 49.43$/bbl