Crude Edges Towards Range High Driven by Supply Concerns

Crude is trading at the top end of the range seen so far this year after new US and UK strikes on Houthi targets on Monday in defence of commercial shipping. The slow return of US output from cold weather disruption is also supportive while ongoing demand concern is limiting upside moves.

• Brent MAR 24 up 0.2% at 80.26$/bbl
• WTI MAR 24 up 0.3% at 74.98$/bbl
• Gasoil FEB 24 up 1.1% at 808.25$/mt
• WTI-Brent down -0.04$/bbl at -5.28$/bbl
• A Ukrainian drone strike on Russia’s Ust-Luga fuel export terminal was also supportive with Novatek suggesting large-scale operations are likely to resume within weeks according to Reuters.
• Around 250-300kbpd of oil output from North Dakota was estimated offline still yesterday but down from a peak of up to 650-750kbpd due to extreme cold and operational challenges.
• Slower demand growth this year is weighing on prices with tepid domestic consumption in China despite measures to shore up the economy.
  • Brent MAR 24-APR 24 up 0.02$/bbl at 0.48$/bbl
  • Brent JUN 24-DEC 24 up 0.07$/bbl at 2.15$/bbl
• Prompt time spreads continue to edge higher reflecting the upside risk from supply concerns while near term options are maintaining a small put skew after narrowing during Dec and early Jan.
• Gasoline crack spreads continue the rally up to the highest since September boosted by refinery outages despite demand falling by around 6.1% last week according to GasBuddy. Diesel spreads have however eased back from highs last week with the warmer US weather.
  • US gasoline crack up 1.3$/bbl at 20.23$/bbl
  • US ULSD crack down -0.9$/bbl at 37.24$/bbl