Crude Extends Decline But Remains Within Recent Range

Crude futures extend the earlier decline back towards the low from Jan 4 but still holding within the range of 74.8$/bbl to 79.4$/bbl seen so far this year. A larger than expected cut in Saudi Arab Light OSPs to Asia and price cuts to all regions is adding bearish pressure.

• Technical analysis shows Brent the primary direction is down with first support at the Jan 3 low of 74.79$/bbl. A resumption of weakness would open the Dec 13 low and bear trigger at $72.67/bbl.
• Sentiment from strong non-OPEC supply and slowing global demand growth this year are outweighing supply risks from the Middle East, Libya and pledged OPEC+ cuts during Q1.
• Overall the majority of vessels are still passing through the Red Sea despite a drop in transit numbers about 15% lower than on average in 2023 according to Vortexa.
• Crude time spreads are following the move with the WTI contango strengthening again after the gains seen last week.
  • Brent MAR 24 down -2.8% at 76.52$/bbl
  • WTI FEB 24 down -3.1% at 71.55$/bbl
  • Brent MAR 24-APR 24 down -0.04$/bbl at 0.18$/bbl
  • Brent JUN 24-DEC 24 down -0.32$/bbl at 1.57$/bbl
  • WTI FEB 24-MAR 24 down -0.05$/bbl at -0.1$/bbl
  • WTI JUN 24-DEC 24 down -0.32$/bbl at 1.74$/bbl