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Crude Steady After Decline on Easing Shipping Risk

OIL

Crude is holding in the 77.1$/bbl to 77.75$/bbl range so far today after falling yesterday as easing shipping concerns in the Red Sea cut the geopolitical risk premium despite ongoing risks from Middle East tensions. A larger than expected draw in US crude inventories in the weekly EIA data released yesterday failed to boost oil prices.

    • Brent MAR 24 up 0.5% at 77.52$/bbl
    • WTI FEB 24 up 0.3% at 72.01$/bbl
    • Gasoil JAN 24 down -2.4% at 752$/mt
    • WTI-Brent down -0.03$/bbl at -6.4$/bbl
  • Downside pressure comes from strong non OPEC production such as from the US, scepticism towards OPEC+ member commitment to output cuts, and the uncertain global economic outlook.
  • The US is trying to reassure shipping companies that the task force to protect the Red Sea route is making it safe to transit despite the threat of Houthi rebel attacks. Maersk are looking to resume passages as soon as possible but cautioned the overall risk is not eliminated.
  • Saudi Aramco could cut the Arab Light OSP to Asia by 1.25$/bbl in February according to a Bloomberg survey.
    • Brent MAR 24-APR 24 up 0.05$/bbl at 0.16$/bbl
    • Brent JUN 24-DEC 24 up 0.02$/bbl at 1.59$/bbl
  • The prompt crude time spreads held steady yesterday despite the front month futures decline but the WTI spread remains in contango while the Brent spread is in narrow backwardation. The longer dated Dec24 spreads however followed the move lower on the day.
  • US gasoline crack is edging higher after ending yesterday relatively unchanged supported by a US inventory draw and increase in implied demand. Diesel cracks are extending the recent trend lower driven by concern for soft demand.
    • US gasoline crack up 0.2$/bbl at 16.74$/bbl
    • US ULSD crack down -0.4$/bbl at 34.39$/bbl
Energy BulletsCommodities
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