Crude Off Earlier High but Supported by Middle East Escalation Risks

The crude market is again trading higher but has pulled back from a Brent spike up to a high of 84.80$/bbl earlier today.

• Brent MAR 24 up 0.3% at 83.77$/bbl
• WTI MAR 24 up 0.2% at 78.16$/bbl
• Gasoil FEB 24 up 4.1% at 870$/mt
• WTI-Brent down -0.05$/bbl at -5.61$/bbl
• The Middle East geopolitical tension remains the key focus after a late Friday Houthi attack on a Russian linked carrier in the Red Sea raised concern that attacks on Red Sea shipping are expanding and not just confined to US, UK or Israeli linked ships. Reports of US soldiers under attack in Jordan on Sunday, near the border with Syria, reportedly by Iranian backed militia (with 3 fatalities) have also added upside to crude.
• Russia has carried out its pledge to cut oil exports according to Deputy Price Minister Novak. The OPEC+ group commitment to cuts remains in focus ahead of the JMMC monitoring committee meeting on Feb 1. The group is not expected to decide on production volumes from April onwards at the meeting, but is likely to announce a decision in the coming weeks.
  • Brent MAR 24-APR 24 up 0.01$/bbl at 0.61$/bbl
  • Brent JUN 24-DEC 24 up 0.1$/bbl at 2.86$/bbl
• Crude curve backwardation also strengthened with near term supply concerns and improved demand sentiment amid China stimulus measures. The prompt and Jan24-Dec24 time spreads are the highest since early November.
• Diesel cracks has also surged higher on risks of an escalation of conflict and with supply limited by refinery outages. Russian refined product exports could fall with several refineries under repair following drone attacks.
  • US gasoline crack down -0.3$/bbl at 19.35$/bbl
  • US ULSD crack down -0.5$/bbl at 40.18$/bbl