Crude oil futures kicked off the new month on an optimistic note, with markets consolidating near the upper end of the 2024 trading range, buoyed by encouraging economic indicators.
Front-month Jun24 ICE Brent futures were observed trading at $87.38/b (0800 GMT), in contrast to Thursday’s pre-holiday settlement of $87/b.
Simultaneously, May24 NYMEX WTI was priced at $83.58/b, compared to Thursday’s settle of $83.17/b.
The uplift in oil futures was driven by robust economic data from China, where the manufacturing sector expanded at its fastest pace in 13 months during March, according to the latest Caixin survey. Notably, growth in both domestic and overseas demand accelerated. The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), providing an independent snapshot of the sector, climbed to 51.1 in March from 50.9 the previous month.
This positive momentum was further reinforced by data released before the weekend from the US, revealing a solid 3.4% annualized growth in the US economy from October through December.
However, concerns persist regarding inflation, as evidenced by the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures price index, which rose by 2.5% for the 12 months ending February, up from January’s 2.4% increase in prices.
Nevertheless, the overall optimistic economic data has helped support the solid gains observed in the first quarter, during which Brent surged by 13% since the beginning of the year.
On the downside, traders remained watchful of the weaker North Sea market, with sentiment also dampened by the decline in distillate margins. North Sea physical grades are currently trading at discounts to the underlying Dated Brent swap, owing to ample supplies of WTI crude from the US.
In the products market, diesel cracks have witnessed a tumble to multi-month lows in Asia and Europe, reflecting oversupply concerns in both the east and west of Suez markets. LSGO cracks dipped below $24/b against ICE Brent crude late last week, while Singapore 10ppm gasoil cracks fell below $20/b against both Brent and Dubai. Despite the loss of approximately 900,000 million bpd of Russian refinery capacity following drone strikes, ample supplies from Asia and the US are expected to cover the diesel losses.
