Volatile Crude Extends Decline on Demand Fears

Crude markets are trading lower today after falling 2.4% yesterday in volatile trading following the wider financial market uncertainty after the collapse of Silicon Valley Bank. Brent crude is down near 80$/bbl as the market speculates on weaker demand and whether the US Feb might slow central bank monetary tightening.

• Brent MAY 23 down -1% at 79.98$/bbl
• WTI APR 23 down -1.1% at 73.98$/bbl
• Gasoil APR 23 down -0.6% at 799.25$/mt
• WTI-Brent down -0.02$/bbl at -5.88$/bbl
• Crude markets were already trending lower last week with concern for global oil demand growth and more modest growth targets in China as the country recovers following covid restrictions. Stronger than expected Russian oil output following sanctions in December and February has added to the bearish market pressure.
• Crude curve backwardation is softening as long dated time spreads are following the market moves lower with Dec23-Dec24 falling back from a high of 5.32$/BBL on 7 March. The prompt Brent spread is however holding just below the high from last week of 0.68$/bbl and the highest since November with support from near term supply concerns due to Russian production cuts this month. The WTI prompt spread remains in contango suggesting ample near term supplies.
  • Brent MAY 23-JUN 23 up 0.03$/bbl at 0.57$/bbl
  • Brent JUN 23-DEC 23 down -0.06$/bbl at 2.19$/bbl
  • Brent DEC 23-DEC 24 down -0.27$/bbl at 3.78$/bbl
• The US gasoline crack spreads are holding steady supported by the US demand recovery seen in the last couple of months. Low gasoline inventory levels in US, a strong US refinery maintenance season and the switch to summer grade gasoline have all added to the price support. Diesel spreads have recovered from a decline last week with support from an expected drop in diesel shipments from Asia due to recovering domestic demand in China.
  • US gasoline crack up 0.3$/bbl at 35.1$/bbl
  • US ULSD crack down -0.7$/bbl at 41.31$/bbl