Crude Ticks Up with China Demand Uncertainty

Crude is ticking higher after recovering from a dip down to 82$/bbl again yesterday. Short term concerns for demand due to the spread of covid and rising case numbers in China is balanced against the potential for a future recovery in Chinese demand with the easing of covid restrictions.

• Brent MAR 23 up 0.7% at 84.07$/bbl
• WTI FEB 23 up 0.7% at 78.91$/bbl
• Gasoil JAN 23 up 1.5% at 932.75$/mt
• WTI-Brent up 0.1$/bbl at -3.54$/bbl
• Global recession fears are also limiting market upside while uncertainty remains over Russian oil output following the introduction of sanctions at the start of December.
• The potential for a demand recovery next year and possible lower Russian output are supporting the forward curve backwardation with spreads holding steady today. With the expiry of the Feb contract yesterday the whole curve is now in backwardation with the front Mar-Apr spread edging higher to 0.2$/bbl.
  • Brent MAR 23-APR 23 up 0.05$/bbl at 0.2$/bbl
  • Brent JUN 23-DEC 23 down -0.03$/bbl at 2.74$/bbl
• Diesel crack spreads are drifting lower while gasoline cracks continue to rally. EIA data yesterday showed a slight recovery in implied product demand while stocks are still low and exports high. The gradual return of US Gulf Coast refinery operations following the winter disruption has eased the upside pressure on diesel.
  • US gasoline crack up 0.3$/bbl at 21.71$/bbl
  • US ULSD crack down -0.8$/bbl at 58.12$/bbl