Crude Edges Higher With Focus on Demand Growth

Crude futures are edging higher driven by better demand optimism after rebounding on Friday from the lowest level since late June. Bearish pressure this month has been driven by strong non-OPEC supply and fears around OPEC+ voluntary cut commitments combined with ongoing demand growth uncertainty.

• Brent FEB 24 up 0.7% at 76.35$/bbl
• WTI JAN 24 up 0.6% at 71.67$/bbl
• Gasoil DEC 23 down -0.1% at 773.5$/mt
• WTI-Brent down -0.07$/bbl at -4.48$/bbl
• Demand is supported by robust US data helping to ease recession concerns, continued refilling of the US SPR and China’s Politburo recommending further fiscal stimulus at “an appropriate pace”.

• Last week OPEC+ members tried to calm the market by voicing their commitment to the latest cuts and to stabilising the market.
• The US DOE is seeking to buy 3mbbls of crude for the US SPR for March delivery. The intent rather than the outright volume to refill the US SPR has given extra support to the crude with further monthly tenders planned for deliveries until at least May.
  • Brent FEB 24-MAR 24 up 0.01$/bbl at -0.15$/bbl
  • Brent JUN 24-DEC 24 up 0.03$/bbl at 1.15$/bbl
• Crude time spreads are following the front month moves with the near term in contango and the longer dated spreads still in backwardation but much softer then seen in late November.
• The monthly IEA, EIA and OPEC reports due this week should help provide more information on the outlook for crude.
• The busiest US year end travel season is expected since 2000 suggesting support for oil product demand. Ongoing weakness in demand and robust US inventories has been weighing on crack spread with US diesel at the lowest since July.
  • US gasoline crack down -0.2$/bbl at 15.03$/bbl
  • US ULSD crack down -0.1$/bbl at 37.17$/bbl