Crude Drifts Lower With Focus on Israel as Ground Offensive on Hold

Crude markets are down on the day from a Brent front month high of nearly 93.8$/bbl on Friday as market focus remains on tensions in the Middle East. The pressure on oil has eased slightly as negotiations to release Israeli hostages has put the ground invasion of Gaza on hold.

• Brent DEC 23 down -0.9% at 91.33$/bbl
• WTI DEC 23 down -1.1% at 87.11$/bbl
• Gasoil NOV 23 down -2.3% at 911.5$/mt
• WTI-Brent down -0.15$/bbl at -4.22$/bbl
• An escalation of the conflict in Israel and concerns for Iranian supply disruption are the main upside risk but is partly offset by a potential increase in supply from Venezuela after the easing of US sanctions.

• Demand uncertainty also helps to limited upside moves despite OPEC+ member cuts this year, but optimism increased slightly last week following US Fed Chair Jerome Powell comments suggesting a slightly more positive economic picture.
  • Brent DEC 23 down -0.9% at 91.33$/bbl
  • WTI DEC 23 down -1.1% at 87.11$/bbl
  • Gasoil NOV 23 down -2.3% at 911.5$/mt
  • WTI-Brent down -0.15$/bbl at -4.22$/bbl
• The near term crude call options continue to hold a premium over puts while the forward curve is still in strong backwardation. Both prompt and longer dated spread are following the flat price moves lower today after softening from a peak in late last month but spreads are still well above levels seen in early September and before.
• Gasoline cracks are holding onto small gains from last week amid tentative signs of stronger demand and with tighter supplies from refinery outages. Diesel spreads are also steady so far today after drifting down from a recent high on 16 Oct.
  • EU Gasoline-Brent down -0.1$/bbl at 6.32$/bbl
  • EU Gasoil-Brent down -0.1$/bbl at 27.52$/bbl