Crude Rallies on Rising Middle East Tensions and Strong China Data

Oil prices surged late yesterday amid rising concern for Middle East tensions after Brent front month earlier fell to a low of just under 89$/bbl. Prices rallied further overnight after stronger than expected Q3 GDP data domestic data and record crude processing rates in China pushed oil up to a high of 92.18$/bbl.

• Brent DEC 23 up 1.8% at 91.54$/bbl
• WTI NOV 23 up 2.1% at 88.5$/bbl
• Gasoil NOV 23 up 2.6% at 925$/mt
• WTI-Brent up 0.15$/bbl at -4.32$/bbl
• Concern for an escalation in the conflict in Israel has increased after the Jordan leg of US President Biden’s trip was cancelled due to an explosion at a Gaza hospital. Any involvement by Iran, either leading to further sanctions or retaliatory blocks on flows via the Strait of Hormuz, could see a further squeeze on supply in an already tight market.
• Some downside pressure has this week been provided by hope for supplies from Venezuela after a deal with the US to ease oil sanctions in exchange for competitive and international monitored presidential elections next year.
• A report that OPEC+ might discuss possible oil output increases for early 2024 during the next meeting if the global oil deficit worsens according to Russia’s Central Bank had driven crude to the lows yesterday.
  • Brent DEC 23-JAN 24 up 0.07$/bbl at 1.41$/bbl
  • Brent DEC 23-DEC 24 up 0.76$/bbl at 8.25$/bbl
• Crude backwardation remains strong with support from Middle East tensions adding to an already tight market and despite economic driven demand. The Brent Dec23-Dec24 spread is gaining back towards the high for the month so far although the prompt spread moves remain more muted.
• Diesel and gasoline cracks are holding relatively steady today ahead of the updated US inventory data after API data last night showed further decline in both crude and product stocks.
  • US gasoline crack down -0.2$/bbl at 8.76$/bbl
  • US ULSD crack up 0.5$/bbl at 46.05$/bbl