Crude Steadies After Fall Amid US Stocks Build and Demand Concern

Crude markets have steadied today after falling more than $2.5/bbl yesterday as some of the geopolitical risk premium eased and market focus switched back to global demand growth concerns from delayed US rate cuts.

• Brent JUN 24 up 0.1% at 87.41$/bbl
• WTI MAY 24 up 0.1% at 82.74$/bbl
• Gasoil MAY 24 down 1.9% at 791.75$/mt
• WTI-Brent down 0.04$/bbl at -5.18$/bbl
• There is significant uncertainty over the details of Israel’s response to Iran’s attack on the weekend but oil prices have eased with no new developments in recent days. New sanctions on Iranian oil are also to be tabled as part of the US foreign aid package currently struggling to pass through the House.
• The US has reimposed restrictions on oil from Venezuela. The US Treasury has given companies 45 days to wind down pending transactions but some doubts remain on what type of transactions will be allowed.
• Another strong increase in US crude inventories in the latest weekly EIA data added to the downside pressure yesterday. Crude stocks built with an unexpected dip in refinery utilisation with production flat at 13.1mb/d and despite a rebound in exports.
  • Brent JUN 24-JUL 24 unchanged at 0.69$/bbl
  • Brent JUN 24-DEC 24 down 0.04$/bbl at 3.96$/bbl
• Crude backwardation continues to soften with both prompt and Jun2-Dec24 time spreads falling back to levels seen at the end of March. The near term crude options market however continues to maintain a skew to the calls.
• Bothe US gasoline and diesel cracks weakened yesterday after the EIA four week average implied demand showed declines on the week. Gasoline demand however remains above the previous five year average while distillates demand is below the previous five year range.
  • US gasoline crack down 0.1$/bbl at 31.8$/bbl
  • US ULSD crack up 0$/bbl at 25.44$/bbl