Crude Holding Steady Amid Concern for Middle East Escalation Risks

Markets are closely watching tensions in the Middle East amid risk of an escalation in the conflict as Israel makes plans for a ground offensive into Gaza. Involvement from Iran is the main risk to oil markets from any reduction in output or if it retaliates to a tightening of sanctions by blocking the Strait of Hormuz. President Biden is due to visit Israel and Jordan on Wednesday amid US efforts to contain the conflict.

• Brent DEC 23 up 0.2% at 89.87$/bbl
• WTI NOV 23 up 0.1% at 86.72$/bbl
• Gasoil NOV 23 down -1.6% at 911.75$/mt
• WTI-Brent down -0.04$/bbl at -4.5$/bbl
• The Biden administration and the government of Venezuelan President Nicolás Maduro have agreed to a deal to ease US sanctions on Venezuela oil in exchange for competitive and international monitored presidential elections next year.
• Oil output in the major US shale oil basins is forecast to fall by 50kbd in November to 9.553mb/d according to the EIA Drilling Productivity Report yesterday.
  • Brent DEC 23-JAN 24 up 0.02$/bbl at 1.4$/bbl
  • Brent DEC 23-DEC 24 up 0.01$/bbl at 7.52$/bbl
• Crude backwardation remains strong amid tight supply concern and a market deficit largely expected this quarter due to OPEC+ member supply cuts. Spreads have however trended slightly lower since late Sep with Brent Dec23-Dec24 falling from over 11.3$/bbl back to 7.5$/bbl.
• US gasoline cracks rebounded from its lowest since 2020 at 7.1$/bbl with recent GasBuddy data suggesting some demand support amid falling pump prices. Diesel spreads have eased back after a rally late last week with tight supplies and low inventories weighed against economic driven demand uncertainty.
  • US gasoline crack up 0.1$/bbl at 9.13$/bbl
  • US ULSD crack down -0.2$/bbl at 45.3$/bbl