Crude Steadies After Rally Yesterday with US Economy Focus

Crude prices are steady and trading in a narrow range today after a 3$/bbl rally yesterday on hopes that talks can result in a raising of the US debt ceiling and will prevent a default and despite a crude build and fairly bearish EIA weekly report yesterday.

• Brent JUL 23 down -0.1% at 76.88$/bbl
• WTI JUN 23 down -0.1% at 72.73$/bbl
• Gasoil JUN 23 up 1.4% at 703.75$/mt
• WTI-Brent up 0.01$/bbl at -4.07$/bbl
• Concern for future demand growth and a potential US recession have been weighing on prices. Uncertainty still surrounds the future economy in China with mixed expectations for the future oil demand growth and recovery in the country.
• OPEC production cuts and supply issues in Iraq and Canada are also supportive while Russian seaborne output remains strong despite pledged production cuts since March.
• Canadian wildfires are still a risk to oil sands and raising the potential for more shut ins in the coming days. Offline oil output in Alberta is already at least 240kbpd and possible more than 300kbpd according to Rystad estimates despite some production resuming earlier this week.
  • Brent JUL 23-AUG 23 down -0.01$/bbl at 0.14$/bbl
  • Brent DEC 23-DEC 24 up 0.01$/bbl at 2.92$/bbl
• The crude forward curve mostly remains in narrow backwardation although prompt spreads are falling this week. The prompt WTI spread is back into contango and trading near the lows from earlier this month. The Dec23-Dec24 spreads have seen more support and following the moves in the futures but remain near the low end of the range seen this year.
• US and European refining margins are edging higher with support from low inventory levels and potential for lower run rates. EIA inventory data yesterday showed another draw in US gasoline stocks to help the gasoline crack to the highest since mid April despite subdued demand ahead of the summer driving season.
  • US gasoline crack down -0.1$/bbl at 35.18$/bbl
  • US ULSD crack up 0.1$/bbl at 29.11$/bbl