Crude Steady With Economic Concerns Offset by China Demand Boost

Crude is holding steady so far today with support from future Chinese demand optimism and possible further Russian oil supply disruption offset against global recession risks.

• Brent MAR 23 down -0.1% at 82.57$/bbl
• WTI FEB 23 down -0.1% at 77.3$/bbl
• Gasoil FEB 23 up 0.4% at 895.25$/mt
• WTI-Brent down -0.03$/bbl at -5.01$/bbl
• A short term increase in crude demand from China ahead of the Lunar New Year holidays and increased import quotas are adding to the market support. The longer term recovery due to a China reopening is not expected to take effect until later in the year.
• Concerns for a global economic slowdown continue to limit any upside moves with weak near term demand keeping the front of the forward curve in contango. Crude time spreads followed the move higher yesterday with support from future Chinese demand optimism. The Apr-May spread switched back from contango into backwardation earlier this week.
  • Brent MAR 23-APR 23 up 0.02$/bbl at -0.17$/bbl
  • Brent JUN 23-DEC 23 up 0.08$/bbl at 2.35$/bbl
• US inventory data yesterday showed a large build in crude stocks due to the reduction in Gulf Coast refining capacity after the severe cold late in December as with a sharp fall in exports.
• Diesel and gasoline spreads are largely unchanged since the release of the US stocks data with the four week implied demand holding steady at very low levels. Low inventory levels and potential future supply risks from the EU ban on Russian products both remain supportive of product prices.
  • US gasoline crack up 0.4$/bbl at 25.25$/bbl
  • US ULSD crack down -0.6$/bbl at 55.72$/bbl