Oil Markets Dip Ahead of US Fed Rate Decision

Crude oil dips today ahead of the US Fed rate decision after a recovery up from 70.18$/bbl on 20 March to a high of 76.38$/bbl yesterday. The US central bank is expected to hike rates by 25bp today adding to the concern for oil demand and pressuring prices lower. Resilient Russian oil output combined with central bank rate tightening and recession fears have weighed on price this month.

• Brent MAY 23 down -0.8% at 74.69$/bbl
• WTI MAY 23 down -0.9% at 69.03$/bbl
• Gasoil APR 23 down -0.2% at 768.75$/mt
• WTI-Brent up 0.02$/bbl at -5.67$/bbl
• Yesterday Russia announced plans to extend the 500kbpd production cut until the end of June. Overall Russian oil exports have remained firm in March despite comments from Russian that they are nearing the target production cut this month.
• Several oil analysts suggest oil market fundamentals are still strong with limited storage or upside supply potential to cover for a rebound in China demand this year.
  • Brent MAY 23-JUN 23 down -0.03$/bbl at 0.26$/bbl
  • Brent JUN 23-DEC 23 down -0.08$/bbl at 1.44$/bbl
  • Brent DEC 23-DEC 24 down -0.16$/bbl at 2.37$/bbl
• The Brent backwardation has weakened this month despite a recovery this week. The banking turmoil has added to the downside pressure on spreads with concern for future OECD oil demand growth. The front of the WTI curve is in contango until July suggesting ample near term supplies.
• Gasoline margins are easing back after a strong rally this year to the highest since Jul 2022 in the run up towards the summer driving season and with the switch to summer grade gasoline. A draw in API oil product inventory data last night suggests no easing of the tight US supplies with low supplies from Europe adding to price support.
  • EU Gasoline-Brent down -0.3$/bbl at 19.66$/bbl
  • EU Gasoil-Brent down -0.5$/bbl at 24.58$/bbl