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Demand Concerns Continue to Weigh on Oil Markets

OIL

Brent crude settled below $100/bbl yesterday on a higher dollar and the backdrop of global recession fears and further weak demand sentiment from China.

  • Fears of a global economic slowdown have weighed heavily on crude markets since mid-June, while China’s zero covid policy which keeps extending is pulling away any upside sentiment. Brent crude tumbled $7 on Tuesday to settle below $100 a barrel for the first time in three months.
  • Brent SEP 22 down -0.3% at 99.45$/bbl
  • WTI AUG 22 down -0.4% at 95.77$/bbl
  • Gasoil AUG 22 up 0.4% at 1081$/mt
  • WTI-Brent down -0.21$/bbl at -6.19$/bbl
  • The sharp drop in crude prices follows fears interest rate hikes to stem inflation will spur an economic downturn that will hit oil demand.
  • Brent SEP 22-OCT 22 down -0.03$/bbl at 3.34$/bbl
  • Brent DEC 22-DEC 23 up 0.01$/bbl at 8.46$/bbl
  • The oil forward curves remain strongly backwardated with prompt time spreads still near recent highs. Longer dated spreads have drifted lower over the last month but remain well above start of the year levels.
  • US gasoline crack up 0.39$/bbl at 40.65$/bbl
  • US ULSD crack up 0.72$/bbl at 57.65$/bbl
  • There are signs that high fuel prices are impacting demand but US gasoline pump prices have now fallen for nearly a full month which may help to support their summer driving season. US refining capacity is running near full-tilt to support product stocks, EIA data out later today will show if that pace is being sustained.
    • Energy BulletsCommodities
    Energy BulletsCommodities

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