Crude Steadies After Rally on OPEC Risks and EIA Stock Draw

Crude is drifting lower after rallying over 3$/bbl from a low of Brent below 75$/bbl on 22 May supported by a big draw in US crude inventories yesterday.

• Brent JUL 23 down -0.2% at 78.22$/bbl
• WTI JUL 23 down -0.3% at 74.08$/bbl
• Gasoil JUN 23 up 0.3% at 700$/mt
• WTI-Brent down -0.03$/bbl at -4.14$/bbl
• Crude has been supported by risks of future cuts to OPEC+ production at the 3-4 June meeting after a warning to oil speculators from the Saudi Energy Minister earlier in the week. Concern for the US economy and recessionary fears are limiting upside moves with persistent inflation and debt ceiling talks ongoing.
• EIA data yesterday showed a big draw in US crude stocks mainly from the US Gulf Coast while gasoline and distillates also drew due to an increase in implied demand ahead of the Memorial day holiday weekend.
  • Brent JUL 23-AUG 23 down -0.01$/bbl at 0.12$/bbl
  • Brent DEC 23-DEC 24 down -0.03$/bbl at 3.5$/bbl
• Long dated time spreads have continued to edge higher in line with the outright futures moves with Dec23-Dec24 up to the highest since the start of May. Prompt spreads are holding in narrow backwardation as WTI fell back near to parity yesterday.
• Gasoline cracks maintain the rally this month pushing the European spread to the highest since Jul 2022. Diesel cracks spreads gained yesterday with support from the EIA data however margins remain low with weak demand and steady global supply this year with increasing refinery runs rates.
  • US 321 crack up 0.2$/bbl at 32.56$/bbl
  • US gasoline crack up 0.1$/bbl at 35.45$/bbl
  • US ULSD crack up 0.2$/bbl at 26.76$/bbl