Crude Steady With Focus on Israel and US Economy

Crude markets are holding steady after drifting lower yesterday as focus remains on any possible escalation in the Israel conflict. Crude maintains much of the premium seen since the Oct 7 attack, but prices have eased as the prospects of an Israeli ground offensive seems to be in doubt, especially while negotiations to release hostages continue.

• Brent DEC 23 up 0.3% at 90.13$/bbl
• WTI DEC 23 up 0.3% at 85.76$/bbl
• Gasoil NOV 23 down -2.1% at 901.75$/mt
• WTI-Brent down -0.07$/bbl at -4.37$/bbl
• The key risk comes from any potential impact on Iran supply which could be greater than any boost to Venezuela production amid easing US sanctions.
• US demand is also back in focus due to the release today of the preliminary October PMIs with uncertainty over future central bank policy amid optimism for a slightly more positive economic picture.
• The IEA World Oil Outlook released today sees oil, gas, coal demand to peak by 2030 with oil demand of 92.5mb/d, down 0.5mb/d from year's report while the 2050 oil demand projection was reduced by 2.4mb/d to 54.8mb/d.
  • Brent DEC 23-JAN 24 unchanged at 1.14$/bbl
  • Brent DEC 23-DEC 24 down -0.08$/bbl at 7.65$/bbl
• The near term crude call options continue to show a premium over the puts amid upside risks although the skew has eased slightly since reaching a peak on Friday. Crude curve backwardation has also softened but remains strong as OPEC+ supply cuts keep the market tight this year.
• Gasoline cracks continue to edge back higher since mid October while diesel spreads are holding at healthy levels driven by low stocks and tight supplies amid refinery outages ahead of the winter heating season.
  • US gasoline crack up 0.2$/bbl at 11.19$/bbl
  • US ULSD crack down -0.2$/bbl at 40.66$/bbl