Demand Concerns Drive Weak Crude and Product Margins

Crude oil continues a steady decline from late last week with focus on global oil demand growth concerns. Weak demand concerns from a potential US recession and slower recovery in China and strong Russian output are weighed against the tighter supplies from OPEC, Iraq and Canada and with US plans to start refilling the SPR after June.

• Brent JUL 23 down -0.1% at 74.06$/bbl
• WTI JUN 23 down -0.1% at 69.97$/bbl
• Gasoil JUN 23 down -1.1% at 661.75$/mt
• WTI-Brent down -0.03$/bbl at -4.11$/bbl
• Further Canadian wildfires are still a risk to Canadian oil sands output after a heat wave resulted in an increase in fires over the weekend.
• Crude oil exports from Iraq’s northern fields in the Kurdistan region have yet to restart despite Iraq’s desire to resume flows on Sat 13 May. Approximately 470kbpd of production is still missing from the market.
  • Brent JUL 23-AUG 23 down -0.04$/bbl at 0.23$/bbl
  • Brent DEC 23-DEC 24 down -0.02$/bbl at 2.38$/bbl
• Crude Dec23-Dec24 spreads are just slightly softer on the day. The prompt spread found some support last week with the WTI just holding onto a narrow backwardation today. The WTI-Brent spread is drifting wider with concern for US demand and after a recent halt to the declining trend in Cushing inventory levels.
• Diesel and gasoline cracks also remain weak with the global demand concerns, but low US inventory levels, an expected boost from the summer driving season and potential refinery runs cuts due to the low margins are still providing some support.
  • US gasoline crack down -0.5$/bbl at 31.49$/bbl
  • US ULSD crack down 0$/bbl at 26.55$/bbl