Crude Stable with Weak Demand Weighed Against Tighter Supply

Crude holds onto gains from the last couple of days with Brent up from a low of 71.6$/bbl on 28 June. Prices were supported by US GDP and weekly claims data yesterday and the US crude inventory draw on Wednesday.

• Brent SEP 23 unchanged at 74.51$/bbl
• WTI AUG 23 down -0.1% at 69.78$/bbl
• Gasoil JUL 23 up 1.4% at 706$/mt
• WTI-Brent down -0.05$/bbl at -4.55$/bbl
• US data suggested a more resilient economy but concern for the impact of weaker global economic growth remains. The risk of further central bank rate hikes due to persistent inflation have weighed on oil demand expectations with front month falling from a high of around 77.2$/bbl on 21 June.
• The Saudi Arabia voluntary production cut for July and potential for extension into future months is helping to limit downside with the August official selling prices likely to be released next week.
  • Brent SEP 23-OCT 23 up 0.03$/bbl at 0.06$/bbl
  • Brent DEC 23-DEC 24 down -0.02$/bbl at 2.52$/bbl
• The crude time spreads followed the price recovery with the Brent Aug-Sep spread up into backwardation ahead of the August contract expiry today. The Dec23-Dec24 spread has regained much of the losses from early this week after falling to the lowest since Dec 2021. The WTI-Brent spread is back up to -4.55$/bbl having closed into -4.4$/bbl yesterday.
• Diesel and gasoline crack spreads are stable as weak demand concerns are balanced against low inventories with limited support from a steady start to the US driving season. Upside diesel moves are limited with Russian diesel output expected to increase in July as maintenance works come to an end and with diesel demand in Germany falling this month.
  • US gasoline crack up 0.1$/bbl at 35.06$/bbl
  • US ULSD crack up 0.2$/bbl at 31.59$/bbl