Crude Softer on Uncertain China Demand

Crude markets are balancing the prospect of a US recession and the impact of high oil prices on demand against ongoing tight supply with the extra uncertainty of demand from China.

• Late last week saw prices recover slightly after falling over 15$ at the start of the week as supply issues halted the drop driven by concerns for the US economy and by the stronger dollar.
• Brent SEP 22 down -1.3% at 105.63$/bbl
• WTI AUG 22 down -1.6% at 103.14$/bbl
• Gasoil JUL 22 up 0.3% at 1136.5$/mt
• WTI-Brent down -0.13$/bbl at -5.55$/bbl
• Crude is falling back again this morning with increasing covid numbers in China. China is maintaining their zero covid policy, but virus numbers are climbing again in Shanghai increasing the risk that a rebound in demand could be delayed with mass testing to be carried out this week.
• Brent SEP 22-OCT 22 up 0.02$/bbl at 3.58$/bbl
• Brent DEC 22-DEC 23 down -0.41$/bbl at 11.18$/bbl
• Tight supply continues to support prices, especially time spreads. The front time spreads for crude fell back slightly late last week but remain near recent highs and are maintaining the steep curve backwardation. US President Biden is due to visit Saudi Arabia during his tour of the middle East this week. He hopes to persuade them to increase production levels to try ease supply. There is no guarantee that an increase in Saudi production would decrease prices though with market fears for the impact of the reduction in future spare capacity.
• US gasoline crack up 0.1$/bbl at 40.19$/bbl
• US ULSD crack up 1.2$/bbl at 50.53$/bbl