Supply Worries Help Crude Recover Some Losses

Oil steady this morning after rising 4$/bbl yesterday and following a fall of over 15$/bb over the previous two days. Prices fell on concerns for oil demand with risks of a US recession increasing but the supply issues have not disappeared. A potential shutdown of the CPC export pipeline could add to oil supply fears and a Chinese stimulus package could help support oil demand.

• Brent SEP 22 up 0.5% at 105.13$/bbl
• WTI AUG 22 down 0% at 102.72$/bbl
• Gasoil JUL 22 up 1.4% at 1145.25$/mt
• WTI-Brent down -0.27$/bbl at -5.6$/bbl
• The Kazakh CPC pipeline risks suspension as the operator appeals a court ruling to temporarily shut down. The court has ordered the shut down for 30 days due alleged violations of an oil spill prevention plan.
• China is considering a support package with a $220bn sale of special bonds in 2H22 brought forward from next year. The move could potentially help with China’s recovery and increase their demand for oil as they recover from covid restrictions.

• Despite the recession fears, the physical market remains very tight with the crude forward curve still in steep backwardation. At one stage yesterday the front WTI spread traded to the highest since early March.
• Brent SEP 22-OCT 22 down -0.01$/bbl at 3.66$/bbl
• Brent DEC 22-DEC 23 up 0.08$/bbl at 10.87$/bbl

• Cracks spreads, especially for diesel, followed the crude move back up yesterday retracing much of the losses from the previous day.
• US gasoline crack up 0$/bbl at 40.85$/bbl
• US ULSD crack down -0.1$/bbl at 51.96$/bbl