Crude Off Lows As US Downs Houthi Missiles

Oil prices trended lower through most of today’s APAC session, but have begun to recover following news that the US hit Houthi missiles on Sunday after strikes on Houthi positions in Yemen the day before. WTI is up 0.2% to $72.40/bbl after a low of $72.16 and Brent is 0.3% higher at $77.58/bbl after falling to $77.31. The stronger USD and signs of robust supply have put a lid on crude with the USD index up 0.2% today to be up 0.8% since Thursday.

• The US hit targets in Iraq and Syria on Friday used by Iran’s Islamic Revolutionary Guard Corps and the associated militants. US President Biden said that this may not be the end of the response to the attack on a US base and that the US could strike targets in Iran if needed, but the US won’t be dragged into a long engagement in the region.
• Attacks by the Iran-backed Houthis on Red Sea shipping have resulted in French shipping giant CMA CGM deciding to reroute its vessels away from the Bab al-Mandab Strait after one of its ships was targeted last week by Houthis. Also, the Chairman of the Suez Canal Authority said that revenue had almost halved in January and flows have fallen 36%.
• News talks were taking place to achieve a ceasefire deal between Israel and Hamas resulted in crude falling sharply last week, but on Sunday US National Security Advisor Sullivan said that an agreement wasn’t to be expected soon.
• The Lukoil refining facility in Volgograd has closed after a fire, which the Russians blame on a Ukrainian drone, pushing diesel prices higher.
• Later the Fed’s Goolsbee and Bostic speak. On the data front there are US/European January services ISM/PMIs.