Tight Supply Keeping Strong Backwardation

Crude rose 2$/bbl yesterday as tight supplies are weighed against risks that a global slowdown will erode demand.

• Crude was trading in very light volume due to the US holiday with a weaker US dollar also supporting prices early in the day. Supply disruptions from Libya and Ecuador and a workers strike in Norway are all adding to the uncertain over global production. China also remains a big unknown as renewed outbreaks of Covid could potentially delay their oil demand recovery.
• Brent SEP 22 down -0.2% at 113.31$/bbl
• WTI AUG 22 up 1.5% at 110.02$/bbl
• Gasoil JUL 22 down -1.4% at 1221.5$/mt
• WTI-Brent down -0.1$/bbl at -6.42$/bbl
• The tight supply drove prompt time spreads higher yet again with the front Brent spread now above 4$/bbl near to the peaks reached in May and June. The spread reached a high of 4.64$/bbl back in March. The whole curve remains strongly backwardated with longer dated spreads following the moves of the outright futures.
• Brent SEP 22-OCT 22 up 0.03$/bbl at 4.07$/bbl
• Brent DEC 22-DEC 23 down -0.08$/bbl at 12.78$/bbl
• The day saw volatile trading in the refined product crack spreads with diesel and gasoline both ending the day down from the previous close. Signs that the high fuel pump process are now impacting demand have brought the spreads down from peak levels seen in early to mid June.
• US gasoline crack up 1.8$/bbl at 44.92$/bbl
• US ULSD crack up 0.8$/bbl at 55.52$/bbl
• Gasoline-Brent up 1.9$/bbl at 35.58$/bbl
• Gasoil-Brent down -0.7$/bbl at 40.07$/bbl