Oil prices soared at the start of the week as OPEC+ shocked markets with a production cut announcement, but prices have since been capped by growing fears of demand destruction due to economic woes, OilPrice said.
Following the explosive rally in oil prices seen earlier this week, additional increases have been sluggish despite notable stock draws in both US crude and product inventories. With US demand coming back after a weak Q1 and OPEC+ getting really serious about curbing production, supply-side factors appear to indicate further upside. At the same time, macroeconomic woes might once again spoil the party, especially if weak US labor market data rekindle the fire of demand destruction.
Recession fears weigh on diesel prices. In contrast to rising oil prices, the premium of diesel against Brent or WTI has been shrinking for the past six months with its crack now at $130/mt as its cyclical sensitivity makes it vulnerable to declines in business activity and lower manufacturing orders.