The oil complex stumbles along despite gasoline’s kicking and screaming.

The oil complex has remained under pressure in May, despite producers’ best efforts to buoy prices.

Production cut announcements have not done enough to reverse sentiment around the negative macro picture. Brent is now trading in the mid $70/bbl range, while WTI is edging lower towards $70/bbl.

Various reports have suggested that Russian product and crude exports are continuing to find new homes, primarily in Asia, and this has led to price stability and in some cases weakness in clean products globally.

A look at OTC markets reveals weak signals in prompt crude with June DFL trading near flat, down from $+0.40/bbl on 1st May. Naphtha has made a significant correction lower, having been the star performer in Jan and Feb this year. Gasoline has bucked the trend and has been the best-performing part of the bbl in May.

Light Ends

The Naphtha weakness in April has carried through into this month with selling getting more aggressive. Cracks have continued their downward trend and, significantly, the front month time spreads (Jun/Jul) in NWE Naptha and MOPJ traded in contango earlier lask week, which reflects traders’ bearish sentiments around expected feedstock demand from petchem manufacturers in the East.

Gasoline has faired a lot better with Europe in particular performing very well in May, resulting in a parabolic jump in the June Gas/Nap. June Ebob cracks have jumped at least $4/bbl in May on the back of strong Ebob spreads and weaker crude.

Nap NWE spread trading at a low of $-1.75 on Monday 15th May.


Diesel seemed to have found a bottom earlier this month when spreads dipped into negative territory. Since then a mild backwardation has re-established in most markets and gasoil cracks have drifted higher. However, the signals in the OTC markets are not so encouraging for bulls.

The prompt 10Cif Med is trading between +$5/MT and +$7/MT which supports reports of Russian ULSD exports finding lots of homes in Turkey and North Africa since the EU import ban came into play. Spreads and cracks could eventually face more pressure as levels have climbed a decent chunk from the lows.

Fuel Oil

Fuel has stopped climbing but has remained supported. The June 3.5% FO crack has traded lots at around $-12.00/bbl, as captured by Tallarium data. Since the 9th of May we have recorded 315 trades at a weighted average price of -$-11.96/bbl in the June Crack.