Crude Ticks Higher on  Geopolitical Risks and Better Risk Sentiment

Crude is ticking higher to extend the gains this week on geopolitical risks and better risk sentiment despite an above-expectation US crude stock build yesterday.

• Brent APR 24 up 0.4% at 79.49$/bbl
• WTI MAR 24 up 0.3% at 74.1$/bbl
• Gasoil FEB 24 up 1.2% at 871.75$/mt
• WTI-Brent down -0.09$/bbl at -5.31$/bbl
• The situation in the Middle East deteriorated with the US killing an Iranian-backed militant leader in Baghdad and Israel appearing to reject a ceasefire deal or a pause in the fighting in Gaza.
• Data today shows an increase in deflationary pressures in China in January. Jet fuel and gasoline demand will be in focus to gauge the strength of travel over the upcoming Lunar New Year holiday.
• The crude time spreads are following the move this week to recover some of the losses from last week. The gains in the WTI prompt spread have however been more muted as the spread remains in narrow contango.
  • Brent APR 24-MAY 24 up 0.01$/bbl at 0.33$/bbl
  • Brent JUN 24-DEC 24 down -0.01$/bbl at 2.3$/bbl
• EIA weekly US petroleum stocks data yesterday showed crude inventories rising more than expected on the week but rising product demand was supportive. The data showed a recovery in both US gasoline and distillates implied demand but both moves were in line with the seasonal trend seen in the previous five years.
• The rise in US demand has added to concern for tighter supplies due to Red Sea tanker diversions and planned and unplanned refinery outages. Gasoline and diesel cracks rallied again yesterday to levels near or at the highest since September.
  • US gasoline crack up 0.4$/bbl at 21.68$/bbl
  • US ULSD crack up 0.3$/bbl at 44.77$/bbl