Crude Steadies After Demand Driven Decline

MNI (London) - Crude has steadied after falling about 6$/bbl so far this week on the impact of central bank tightening and recession on global oil demand. Price volatility remains high with low liquidity and uncertainty over both Chinese demand and Russian supply.

• Brent FEB 23 up 0% at 79.37$/bbl
• WTI JAN 23 down -0.1% at 74.19$/bbl
• Gasoil DEC 22 up 0.9% at 829.75$/mt
• WTI-Brent up 0.02$/bbl at -5$/bbl
• Optimism for future Chinese oil demand has been boosted by signs of an easing to their covid restrictions and quarantine requirements. Current demand however remains weak with both Chinese exports and imports falling in November.
• Total Russian crude output has held up better than expected but could now decline following the start of sanctions at the start of the week. In response to the sanctions Russia are considering a regularly revised price floor or maximum discount for oil sales.
  • Brent FEB 23-MAR 23 up 0.05$/bbl at -0.27$/bbl
  • Brent JUN 23-DEC 23 up 0.05$/bbl at 1.52$/bbl
• Prompt crude time spreads remain in contango suggesting that near term supplies are healthy and demand weak. The softening trend for the remainder of the curve continues with the Jun23-De23 spread down from nearly 5$/bbl on Nov 7 to just 1.5$/bbl today.
• Demand concerns are also feeding into weakness in the refined products with diesel cracks trending lower over the last week. Gasoline cracks have also trended lower although the European spread found some support yesterday after turning negative for the first time since the start of September.
  • US gasoline crack up 0.3$/bbl at 16.35$/bbl
  • US ULSD crack up 0.2$/bbl at 48.14$/bbl