Oil Markets Flat Against Balanced Risks

Oil markets continued to balance the risk of an economic downturn against supply disruptions as G7 leaders discuss a Russian oil price cap and ahead of an OPEC meeting this week.

• The potential reduction to supply has pushed Brent back to levels from the middle of June, erasing half of the recent losses arising from economic risk fears. Political protests in both Libya and Ecuador are potentially restricting crude output with Libya already producing half of start of year levels and Ecuador possibly halting output completely. Libya has recently been producing 600-700kbpd and Ecuador about 500kbpd.

• Brent AUG 22 down -0.3% at 117.66$/bbl

• WTI AUG 22 down -0.2% at 111.55$/bbl

• Gasoil JUL 22 up 0.7% at 1227.25$/mt

• WTI-Brent up 0.19$/bbl at -6.12$/bbl

• The concerns for oil demand growth have been impacting some market spreads with the WTI-Brent spread falling 0.9$/bbl as low as -6.56$/bbl before bouncing back. Refined product crack spreads have also reacted with the US and European diesel spreads at one point falling 13$/bbl over the last 2 days before recovering a couple of dollars late yesterday.

• US 321 crack up 0.5$/bbl at 52.09$/bbl

• US gasoline crack up 1$/bbl at 48.18$/bbl

• US ULSD crack down -0.6$/bbl at 59.91$/bbl

• Gasoline-Brent down -1.2$/bbl at 43.45$/bbl

• Gasoil-Brent down -0.9$/bbl at 42.61$/bbl

• The tight market supply is maintaining strong forward curve backwardation with prompt time spreads trading at the highest levels since early March. Longer dated time spreads have been following the moves in the outright futures

• Brent AUG 22-SEP 22 down -0.02$/bbl at 4.16$/bbl

• Brent DEC 22-DEC 23 down -0.05$/bbl at 12.64$/bbl