Crude Lower as Venezuela Sanctions Relief Eases Pressure from Iran Concern

Crude eases back from a high of 91.89$/bbl yesterday with US plans for some oil-related sanctions relief for Venezuela easing the pressure from the supply risks from rising Middle East tensions.

• Brent DEC 23 down -0.3% at 91.2$/bbl
• WTI NOV 23 down -0.1% at 88.26$/bbl
• Gasoil NOV 23 down -0.8% at 905.75$/mt
• WTI-Brent up 0.13$/bbl at -4.05$/bbl
• The US plans sanctions relief on Venezuela beginning almost immediately in response to Tuesday’s election deal between Venezuela govt and opposition. The US is issuing licenses to broadly ease sanctions on Venezuela’s oil and gas sector which could boost oil output by 25% to about 200kbpd.
• OPEC is not planning to hold an extraordinary meeting or to take immediate action following calls by Iran for Muslim countries to impose an oil embargo on Israel. Any involvement by Iran is the key supply risk in an already tight market.
• EIA data yesterday showed a larger than expected draw in US inventories while the WTI-Brent spread narrowed with another draw at Cushing to the lowest since 2014.
  • Brent DEC 23-JAN 24 down -0.03$/bbl at 1.25$/bbl
  • Brent DEC 23-DEC 24 down -0.11$/bbl at 8.02$/bbl
• The near term crude option skews are holding a call premium reflecting concern for potential upside risks while crude backwardation remains strong with tight near term supplies offsetting demand uncertainty.
• Gasoline and diesel cracks edged slightly higher yesterday after a US inventory draw and small recovery in demand although diesel later pulled back in line with the crude price move.
  • US gasoline crack down -0.4$/bbl at 10.31$/bbl
  • US ULSD crack down -0.6$/bbl at 43.04$/bbl