Crude Testing Higher On OPEC Production Risks

Crude is trading at the high end of the 73.5-77.6$/bbl range seen for much of this month supported by uncertainty over OPEC+ output. Concern for the US economy and recessionary fears are limiting upside moves with debt ceiling talks ongoing.

• Brent JUL 23 up 1% at 77.6$/bbl
• WTI JUL 23 up 1.2% at 73.75$/bbl
• Gasoil JUN 23 up 0.1% at 690$/mt
• WTI-Brent up 0.06$/bbl at -3.85$/bbl
• The Saudi Energy Minister Prince Abdulaziz bin Salman yesterday sent a warning to oil speculators. OPEC attempted to calm market speculation with voluntary production cuts which started in May but uncertainty remains for the outcome of the group ministerial meeting on 3-4 June.
• Canadian wildfires have resulted in a drop in oil and gas production with an estimated 240k to 280k of crude oil production in Alberta halted. The risk of dry weather could extend the wildfires well into June although the number of fires has decreased in recent days.
  • Brent JUL 23-AUG 23 up 0.02$/bbl at 0.12$/bbl
  • Brent DEC 23-DEC 24 up 0.22$/bbl at 3.47$/bbl
• Crude time spreads also gained ground yesterday but remain in narrow backwardation. The Dec23-Dec24 spread has recovered from a low of around 2.3$/bbl last week but is still well below the recent highs of nearly 5.9$/bbl in April. The WTI-Brent spread has narrowed this week with optimism for negotiations from the US supporting WTI prices.
• US gasoline crack spreads are holding relatively stable today. Concern for oil demand growth and recovering refinery run rates are offset by support from low inventories as the summer driving season approaches. Diesel cracks remain low due to weak demand with the threat of a recession as diesel flows from the US Gulf Coast to Europe stay strong.
  • US gasoline crack down 0$/bbl at 35.33$/bbl
  • US ULSD crack up 0.1$/bbl at 25.79$/bbl