Crude Eases Off Highs as China Urge Iran to Curb Houthi Attacks

Crude markets have edge down after front month reached the highest since November, breaking through the previous range highs yesterday. Ongoing Middle East tensions and the escalation in attacks on Russia’s energy infrastructure by Ukraine are supportive and combined with a US crude inventory draw this week and potential additional China stimulus plans.

• Brent MAR 24 down -0.4% at 82.07$/bbl
• WTI MAR 24 down -0.7% at 76.83$/bbl
• Gasoil FEB 24 up 1% at 838.5$/mt
• WTI-Brent down -0.11$/bbl at -5.23$/bbl
• Prices have eased slightly after Reuters reports that the China authorities have asked Iran to curb Houthi attacks on Red Sea, with the news wire reporting that if China's interests are harmed it could impact commercial relations with Iran.
• Demand sentiment improved after data showed the US economy expanded quicker than expected in Q4 and after the Chinese central bank cut the reserve ratio to support economic growth.
• North Dakota oil production was disrupted by 130-180kbpd on Thursday due to cold weather last week according to the pipeline authority compared to a peak disruption of around 700kbpd on Jan 17.

• Brent MAR 24-APR 24 up 0.06$/bbl at 0.53$/bbl
• Brent JUN 24-DEC 24 down -0.02$/bbl at 2.63$/bbl
• Crude curve backwardation also strengthen yesterday amid near term supply concerns and improved demand sentiment. The prompt and Jan24-Dec24 time spreads are the highest since early November.
• Gasoline cracks have fallen since Jan 22 with EIA data showing implied demand below the previous five year range and backing up weak estimates from OPIS and GasBuddy. Cracks are seeing support from recent US refinery outages and a heavy upcoming refinery maintenance season.
  • US gasoline crack down -0.1$/bbl at 18.79$/bbl
  • US ULSD crack down -0.3$/bbl at 38.5$/bbl