Global product markets weekly: margins fall as regional gasoline cracks fall below zero

Crude prices slightly rose during the week commencing 14 January 2019, with North Sea Dated rising $1.20/bbl to average $59.80/bbl for the week. The OPEC + agreement seems to be holding well so far, with Saudi Arabia openly stating its willingness to operate “below [their] commitment.” The demand side remains uncertain, however this likely hinges on US China trade policy in 2019. The importance of the two countries cannot be overstated, as China’s recent GDP rating of 6.6% growth is the lowest in over a decade. While this could signal fundamental weakness, it’s highly likely that a portion of this deceleration is due to US-imposed tariffs on goods exported to the United States. The other key barometer for global demand is Federal Reserve policy. Chairman Powell has recently sent out a few dovish signals, which have allowed equity markets to rebound, potentially restoring a degree of confidence in the 2019 global demand picture. Our latest outlook has Brent averaging $65/bbl in 2019.