The oil market managed to edge higher yesterday despite there still being little progress in US debt ceiling talks as well as some hawkish comments from Fed officials.

A couple of officials suggested that the Fed may still have to hike rates further. Obviously, the more the Fed increases rates, the more likely we are to see a hard landing, which would hit oil demand hard.

For now, ING analysts are assuming that 2023 US oil demand will be largely flat year-on-year. Despite the move higher yesterday, sentiment still remains mostly negative in the oil market and this is evident in positioning data which shows that speculators have reduced their net long in ICE Brent significantly in recent weeks.

Positioning data shows that there is still a sizeable gross short in ICE Brent, however, these shorts will want to be careful as we approach the next OPEC+ meeting, which is scheduled for 4 June. OPEC+ have surprised the market a couple of times recently, so market participants may be reluctant to carry too much risk into this meeting.

The 650Mbbls/d Dangote oil refinery in Nigeria has finally opened after years of delays. While the refiner has said it will start shipping refined products by July or August, it is still unclear how quickly it will be able to ramp up operations.

According to reports, there has been little in the way of commercial activity from the refiner, which suggests that any meaningful volumes coming out of the refinery will still be several months away at least.

The refinery will be important for both crude and product trade flows when fully operating, potentially meaning reduced crude exports as well as reduced imports of refined products.