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Crude Volatile Heading Into Year End, Supply Concerns Persist

OIL

Oil prices fell over 2% yesterday giving up most of Tuesday’s gains despite continued risks to shipping in the Red Sea. The volatility is being driven by light liquidity due to the holiday season, year-end positioning and unfavourable technicals. Currently, oversupply concerns are never far away though. The USD index fell 0.5%.

  • WTI is down 2.3% to $73.82/bbl, close to the intraday low of $73.77. Brent is 2.1% lower bringing it below $80 again. It is currently around $79.39.
  • Risks to shipping in the Red Sea from Iran-backed Houthi rebels failed to support crude on Wednesday. Danish shipping giant Maersk has said that it will resume using the important route given the naval support now provided, but Hapag-Lloyd has said that it will avoid it.
  • Bloomberg is reporting that there was a US crude inventory build of 1.84mn barrels in the latest week after almost a million the week before, according to people familiar with the API data. Gasoline stocks fell 482k but distillate rose 272k. The official EIA data is out later today.
  • On Wednesday Russian deputy PM Novak said that about half of Russian oil and products went to China in 2023.

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