Oil futures: Crude edges up from monthly lows
Quantum Commodity Intelligence – Crude oil futures in Thursday edged up after tumbling around 4% in the previous session, as recessionary fears in the US continue to bite.
Jul23 ICE Brent futures were trading at $78.24/b (1930 GMT), compared to the day's range of $77.36-78.55/b and Wednesday's settle of $77.72/b, while Jun23 was trading at $78.28/b heading into the expiry.
At the same time, Jun23 NYMEX WTI was trading $74.79/b, versus Wednesday's close of $77.37/b.
Both benchmarks were back at levels prior to the OPEC+ cuts announced at the start of April, having fallen by more than 10% from mid-month highs.
Concerns over the health of the US economy were further heightened this week after First Republic Bank reported the loss of $100bn worth of deposits during the March banking crisis.
Share prices in the troubled regional bank slumped by another 33% on Wednesday, compounding the 50% losses from the previous session.
"First Republic may lose access to emergency Fed support, such as the discount window, unless it is shored up by private backers. The Fed held firm through the collapse of Silicon Valley Bank in March and hiked rates by 25bps in March," said Edward Bell, Senior Director at NBD.
"The stress around First Republic is about one week ahead of the next FOMC where we still expect another 25bps hike from the Fed," added Bell, referencing the May Federal Reserve meeting.
Slowdown
Stephen Innes, managing partner SPI Asset Management, flagged further concerns over the "ongoing freight recession," which he described as a precursor to a broader slowdown in economic activity.
"Transports are flashing red, with domestic volumes at UPS down 5.4%, with Next Day Air and Deferred hitting particularly hard at -11% and -25%, respectively, suggesting the drop off in US retail sales is returning to nip at the heels of US investors," said Innes.
The fall in US crude inventories reported by the EIA and API largely took a back seat this week, while concerns over global refining margins also unnerved markets.
Even in Asia, where the market is pinning its hopes on for a demand-led recovery, distillate and light-end cracks continue to tumble.
Benchmark 10ppm Asian gasoil cracks versus Brent slumped to 15-month lows of under $14/b this week, while jet margins followed a similar pattern.
Gasoline cracks have also come off hard, slumping from almost Brent +$20/b at the start of April to three-month lows of below $10/b on Wednesday, based on Quantum front-line swaps data.
By contrast, HSFO cracks have seen something of a renaissance this year, rallying from around $25/b under Brent in early February to a discount of $10/b by late April.
