Risk of US Fed Tightening Driving Crude Lower

Crude oil extends the weekly decline as Brent front month has fallen from the peak of around 86.7$/bbl from 7 March with market concerns for future central bank policy and the impact on oil demand. Market focus has been on the downside risks to demand since hawkish comments from US Feb Chairman Powell earlier in the week taking over from the upside risks of an oil demand recovery in China.

• Brent MAY 23 down -0.7% at 81.03$/bbl
• WTI APR 23 down -0.9% at 75.03$/bbl
• Gasoil APR 23 down -3.5% at 772.75$/mt
• WTI-Brent down -0.1$/bbl at -5.86$/bbl
• Disruption to Russian output remains an uncertainty with seaborne exports maintaining above 3mbpd despite the EU and G7 sanctions and the expected production cut during March.
• Prompt time spreads are relatively steady with Brent still trading just below the recent highs but longer dated spreads have followed the pull back in the wider crude market this week. Dec23-Dec24 is down from 5.3$/bbl on 7 Mar to below 4.1$/bbl.
  • Brent MAY 23-JUN 23 unchanged at 0.5$/bbl
  • Brent JUN 23-DEC 23 down -0.04$/bbl at 2.38$/bbl
• Diesel markets are also trending lower reflecting the demand concerns with mild weather, stronger than expected Russian product output and above normal inventories in Europe adding to the move. Gasoline cracks have dipped lower but remain much stronger due to recovering US demand, low inventory levels in US and a strong US refinery maintenance season ahead of the upcoming US driving season and switch to summer grade gasoline.
  • US gasoline crack down -0.4$/bbl at 33.24$/bbl
  • US ULSD crack down -0.7$/bbl at 35.76$/bbl