Crude Eases Back as Soft Demand Set Against Middle East Tensions

Crude prices have eased back from the highest since Jan 29 seen on Friday with ongoing Middle East geopolitical tensions weighed against concerns for the demand outlook.

• Brent APR 24 down -0.7% at 82.86$/bbl
• WTI APR 24 down -0.7% at 77.9$/bbl
• Gasoil MAR 24 down 0% at 847.5$/mt
• WTI-Brent up 0.09$/bbl at -4.96$/bbl
• Geopolitical issues persist with no progress being made in resolving the conflict in the Middle East while Red Sea transit risks continue to cause shipping disruption and diversions. UKMTO reported today another vessel had been struck by Houthi rebels off the coast of Yemen with the crew abandoning the ship. The US said that it has struck five Houthi targets.
• Resilient inflation and the risk of US Fed maintaining interest rates higher for longer are weighing on oil demand growth forecasts. IEA last week suggested an oil market surplus this year amid soft global demand growth while OPEC+ production cuts are not meeting pledged levels.
• Trading is likely to be thin with the US closed for a holiday although Chinese markets have reopened after the Lunar New Year holiday period.
  • Brent APR 24-MAY 24 unchanged at 0.73$/bbl
  • Brent JUN 24-DEC 24 down -0.09$/bbl at 3.08$/bbl
• Crude backwardation remains strong with time spreads today easing back from the highest since October last week suggesting tight market conditions.

• Both gasoline and diesel cracks fell last week with diesel reversing the gains seen in early February with EIA data last week showing weaker seasonal demand. Red Sea diversions, refinery maintenance, and drone attacks on Russian energy infrastructure this year are however still supportive.
  • US gasoline crack up 0.4$/bbl at 18.85$/bbl
  • US ULSD crack down -0.4$/bbl at 38.28$/bbl