Crude Holding Gains on Red Sea Risks

Brent crude is steady after seeing a net gain of about 3$/bbl so far this week as focus remains on the disruption to shipping through the Red Sea region and with added support from a weaker US dollar. The market upside has so far been relatively limited with the oil flows able to divert round the longer route via the Cape of Good Hope.

• Brent FEB 24 up 0.3% at 79.45$/bbl
• WTI FEB 24 up 0.4% at 74.24$/bbl
• Gasoil JAN 24 up 0.1% at 794$/mt
• WTI-Brent down -0.06$/bbl at -5.21$/bbl
• The US has put together a new naval task force to patrol the troubled area and protect commercial vessels. The US and allies are reportedly considering military strikes on Houthi militants based in Yemen. The Houthis warned the US they will be legitimate targets if they interfere in its ongoing operations against Israel-linked vessels.
• Strong non-OPEC supplies especially from the US continue to weigh on oil markets as OPEC+ voluntary cuts for Q1 have failed to provide much of a boost amid uncertainty over member commitment. The latest weekly US inventories from EIA are due out later after API data last night showed crude and product builds.
  • Brent FEB 24-MAR 24 up 0.03$/bbl at -0.11$/bbl
  • Brent JUN 24-DEC 24 up 0.01$/bbl at 1.43$/bbl
• Crude time spreads continue to recover ground reflecting the increased upside risk from the Red Seas situation, but spreads remain in contango until May suggesting healthy near term supplies.

• Diesel and gasoline crack spreads are also edging higher ahead of the stocks data and after US retail gasoline demand saw an increase of 2.0% for the week ending December 16 according to GasBuddy.
  • US gasoline crack down -0.3$/bbl at 18.21$/bbl
  • US ULSD crack down -1.5$/bbl at 39.24$/bbl