Crude Steadies After Sell-Off Yesterday

Crude has steadied this morning after a 3$/bbl fall yesterday as global economic concerns and weak future oil demand growth and robust Russian output outweighs tighter supplies. Crude markets have now reversed all the gains seen in response to the OPEC production cut announcement at the start of April. Focus remains on oil demand growth ahead of potential further central bank rate hikes in the US and EU next week.

• Brent JUN 23 up 0.5% at 78.1$/bbl
• WTI JUN 23 up 0.4% at 74.58$/bbl
• Gasoil MAY 23 down -1.4% at 694.75$/mt
• WTI-Brent down -0.18$/bbl at -3.52$/bbl
• An expected recovery in China remains an upside risk and the upcoming holiday period could bring a potential short term boost to fuel demand. Tighter supplies are also supportive with the OPEC production cut starting in May and disruption to Kurdish and Nigeria output.
• Crude time spreads have followed the decline in futures to bring near term spreads down towards parity. Spreads are now back at the low levels seen in March.
  • Brent JUN 23-JUL 23 up 0.04$/bbl at 0.01$/bbl
  • Brent DEC 23-DEC 24 up 0.14$/bbl at 3.23$/bbl
• A large draw in EIA crude stocks yesterday was not enough to support the crude market but a gasoline stock draw and higher gasoline demand helped boost the crack spreads.
• Diesel markets are still weak with US and European diesel forward curve backwardation at the narrowest since December 2021. Near term Gasoil spreads are now just in contango due to weak demand and suggesting ample supplies. Low margins are leading some Asian refiners to consider run cuts in the coming months.
  • US gasoline crack up 0$/bbl at 31.24$/bbl
  • US ULSD crack up 0.2$/bbl at 25.51$/bbl