OIL: Crude Holds June Gains Amid Further Shipping Attacks

Front month Brent is holding below the high of $86.24/bbl from Friday and the prompt spread near the highest since April. Volatility near the lowest since 2019 as futures prices steady following the rally seen in the first half of June.

• Funds increased net longs positioning last week to reverse the decline seen at the start of June at the time of the OPEC meeting. The market remains bullish with the crude balance expected to tighten over the summer with production cuts still in place and amid improving fuel demand.
  • Brent AUG 24 down 0% at 85.2$/bbl
  • WTI AUG 24 down 0% at 80.69$/bbl
  • Gasoil JUL 24 down 0.8% at 777.25$/mt
  • Brent AUG 24-SEP 24 down 0.04$/bbl at 0.87$/bbl
  • Brent DEC 24-DEC 25 down 0.07$/bbl at 4.93$/bbl
• Concerns in US and China limit upside move as the US Fed optimism remains sluggish with plans for just one rate cut in 2024 while recent data from China has been mixed.
• Ongoing Middle East tensions and an expected Atlantic hurricane season are added upside price risks.
• Threats to shipping also persist and are pushing costs higher. A ship was struck by Houthi drones off the coast of Yemen on Sunday. According to the UK Navy, the ship had to be abandoned. Today the US reported another vessel had been damaged in the area.
• Diesel cracks are edging lower but holding net gains this month while gasoline cracks saw a net gain last week with a US transportation fuel demand boost expected over the July 4 holiday period.
  • US gasoline crack down 0.2$/bbl at 23.98$/bbl
  • US ULSD crack up 0.2$/bbl at 24.9$/bbl