Crude Steady After Unwinding Gains Following Israel Conflict

Brent front month crude fell to a low of 85.2$/bbl amid ongoing uncertainty over the conflict in Israel with the risk of escalation into the wider region. Crude fell on a NY Times report that US intelligence showed Iran were surprised by the Hamas attack suggesting no involvement from Iran in the conflict.

• Brent DEC 23 down -0.5% at 85.35$/bbl
• WTI NOV 23 down -0.7% at 82.91$/bbl
• Gasoil NOV 23 up 0.5% at 872.25$/mt
• WTI-Brent up 0.01$/bbl at -3.78$/bbl
• The pullback has unwound the gains post the attack with little impact on crude flows currently expected. Demand concerns due to the risk of higher for longer central bank continue to limit the tight supply driven upside with US September CPI data due out later today as well as monthly reports from IEA and OPEC.
• The EIA STEO report yesterday forecast global inventories are expected to fall 0.2mb/d in H2 2023 due to supply cuts from Saudi Arabia. EIA revised up its forecast for crude oil prices in 2024 with WTI up 9.2% to 90.91$/bbl while Brent is up 7.6% to 94.91$/bbl.
  • Brent DEC 23-JAN 24 down -0.11$/bbl at 1.02$/bbl
  • Brent DEC 23-DEC 24 down -0.39$/bbl at 5.67$/bbl
• Prompt Brent time spread and Dec23-Dec24 spreads are trading back at the levels seen on Friday in a reversal of the risk premium seen in the prices at the start of the week.
• Diesel cracks rallied but gasoline remaining relatively unchanged yesterday ahead of the updated EIA inventory data due out later today. The API data last night suggested a large increase in crude stocks but with another draw at Cushing while gasoline built and distillates drew.
  • US gasoline crack up 0.1$/bbl at 9.09$/bbl
  • US ULSD crack down -0.2$/bbl at 42.68$/bbl