Crude Holding Onto Risk Premium Driven by Israel Conflict

Crude front month is holding steady after surging higher at the start of the week amid concern for oil supplies amid the conflict in Israel. Limited impact is currently expected on oil flows but any expansion of tensions into Iran could risk supplies. Demand concerns due to the risk of higher for longer central bank rates are weighed against tight supplies with focus this week on the US September CPI data due out on Thursday.

• Brent DEC 23 up 0.1% at 87.78$/bbl
• WTI NOV 23 up 0.1% at 86.08$/bbl
• Gasoil OCT 23 up 1.2% at 912.25$/mt
• WTI-Brent up 0.06$/bbl at -3.51$/bbl
• Reports of a new round of China stimulus to help the economy meet the government’s annual growth target has added some support.
• The market will also look for indications of future supply demand expectations from the monthly oil reports from EIA, IEA and OPEC due out later this week.
  • Brent DEC 23-JAN 24 up 0.02$/bbl at 1.44$/bbl
  • Brent DEC 23-DEC 24 up 0.12$/bbl at 7.71$/bbl
• Prompt Brent time spread is trading back at the levels seen on Friday although the WTI spread is holding onto gains from early this week. The Dec23-Dec24 spread is trading near the low for the week but still slightly above levels from the end of last week.
• Gasoline crack spreads are steady after small gains yesterday after the US spread fell to the lowest since April 2020 and down from over 40$/bbl in mid August to a low of nearly 7.4$/bbl yesterday. Refinery margins still support high refinery utilisation with relatively strong distillate demand and tight supplies offsetting the weak gasoline demand amid high US pump prices after the end of the peak summer season.
  • US gasoline crack down -0.1$/bbl at 8.94$/bbl
  • US ULSD crack up 0.6$/bbl at 41.57$/bbl