Crude Edges Higher as Geopolitical Tensions Set Against Demand Concern

Crude edges higher today after losses last week as slower global demand growth and a stronger dollar combined with robust global supplies to offset Middle East conflict concerns for supply and as a Ukrainian drones struck southern Russia's largest refinery.

• Brent APR 24 up 0.2% at 77.45$/bbl
• WTI MAR 24 up 0% at 72.3$/bbl
• Gasoil FEB 24 up 1.1% at 822.75$/mt
• WTI-Brent down -0.01$/bbl at -5.08$/bbl
• US continued strikes against Houthis in Yemen with 36 strikes on Saturday. US President Biden said the US could strike targets in Iran if needed, but the US won’t be dragged into a long engagement in the region.
• US National Security Advisor Sullivan said that a ceasefire deal between Israel and Hamas wasn’t to be expected soon.
  • Brent APR 24-MAY 24 down -0.03$/bbl at 0.23$/bbl
  • Brent MAY 24-JUN 24 down -0.03$/bbl at 0.24$/bbl
  • Brent JUN 24-DEC 24 down -0.07$/bbl at 2.01$/bbl
• Despite the ongoing geopolitical risks and tanker diversions the prompt WTI time spread has fallen back into contango suggesting ample near term supplies. Brent backwardation softened last week from highs seen on Jan 28.
• Diesel markets are supported after the Lukoil refining facility in Volgograd closed after a fire, which the Russians blame on a Ukrainian drone and added to US refinery outages late last week. Diesel markets were previously under downside pressure last week along with crude amid global demand concerns after US payrolls data prompted Fed repricing suggesting lower rates cuts this year.
  • US gasoline crack up 0.2$/bbl at 17.89$/bbl
  • US ULSD crack up 0.5$/bbl at 40.31$/bbl