Crude Testing Lower End of Weekly Range

Crude is testing the lower end of the recent range as front month Brent has held between about 84$/bbl and 87$/bbl over the last week. Further central bank tightening with ongoing inflationary pressures continues to weigh on the prospects for oil demand growth.

• Brent APR 23 down -1.4% at 83.98$/bbl
• WTI MAR 23 down -1.5% at 77.32$/bbl
• Gasoil MAR 23 down -2.5% at 799.75$/mt
• WTI-Brent down -0.05$/bbl at -6.41$/bbl
• The main upside risks are an oil demand recovery in China and supply concerns from Russia. The timing of the expected recovery in China’s oil demand remains uncertain but travel data is showing a rebound in activity so far this year.
• The crude curve is still in backwardation although spreads have softened slightly this week. Spreads rallied on the increased supply risks following the announced cut to Russian production in March last week but have been drifting back lower since. The prompt WTI spreads have been mostly trading in contango since November suggesting ample near term supplies while with US demand remains weak.
  • Brent APR 23-MAY 23 down -0.02$/bbl at 0.32$/bbl
  • Brent JUN 23-DEC 23 down -0.12$/bbl at 2.58$/bbl
• Gasoline and diesel cracks are following the move lower driven by weak demand despite the upside risk of tight supplies. US refinery runs fell this week with output impacted by the strong maintenance season and global product markets are still waiting to see the impact of the latest sanctions against Russia on global product flows.
  • US gasoline crack down -1$/bbl at 22.43$/bbl
  • US ULSD crack down -1$/bbl at 38.28$/bbl