OIL: Crude Steadies After OPEC Driven Drop Ahead of EIA Stocks Data

Crude markets are holding steady after falling 4.5% to the lowest since early February this week following the OPEC decision to gradually return voluntary supply cuts from Q4.

• Strong supply from non-OPEC countries and mixed OPEC member compliance with cuts is adding to global supplies but the crude curve is still holding in backwardation.  Time spreads have reduced over the last week, but the prompt spreads found some support yesterday after falling to just above parity.
  • Brent AUG 24 down 0% at 77.49$/bbl
  • WTI JUL 24 down 0.1% at 73.2$/bbl
  • Gasoil JUN 24 up 0.2% at 704.75$/mt
  • Brent AUG 24-SEP 24 down 0.02$/bbl at 0.23$/bbl
  • Brent DEC 24-DEC 25 down 0.09$/bbl at 2.86$/bbl
• OPEC oil output rose in May, according to a Reuters survey, driven by higher exports from Nigeria and Iraq which offset voluntary cuts.
• Concern for soft demand growth from China and the risk that the Fed may not cut rates until later this year could also pressure US demand while near term fuel demand continues to disappoint.
• A repeat of the rise in US stockpiles from the EIA data later today, as reported by the API yesterday, could put further downward pressure on crude.
• The OPEC+ group could still pause the unwinding of the cuts or reverse them if demand isn’t strong enough and prices look weak.
• US gasoline and diesel cracks are edging higher again today after a recovery yesterday, as product markets hold up better than a more bearish crude complex.
  • US gasoline crack up 0.3$/bbl at 25.32$/bbl
  • US ULSD crack up 0$/bbl at 22.93$/bbl