The crude market remains volatile in a tight range as competing forces push the futures market around. There is about $5-$7 of geopolitical premium that is sitting in the market, and whenever Iran responds- depending on the reaction- will either cause a spike and fade or a straight drop. The IEA has reduced their oil demand forecast for this year and estimated even slower growth in 2025 due to weak economic outlook. They also claim that EV’s popularity will impact demand, but EV sales have all but collapsed and most car companies are slashing production on their EV lines. Oil imports into China were strong as refiners took advantage of some pricing, and to bring in crude ahead of maintenance season. The turnarounds have already begun due to weak internal demand, which has kept run rates low. This also pushed state and private facilities to enter into turn arounds “sooner” than normal due to weak internal margins. The problem is- I don’t see a big step up in runs because crack spreads have been under pressure in Asia. I see some support in crack spreads in the near term as Russian product shifts out of Asia near term and maintenance season gains steam in the region. Gasoline will remain heavy, but I expect to see some recovery on the distillate side as Russian product shifts around.
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