Crude Weighs Middle East Risks Against Soft Demand Growth

Crude is holding steady today with Middle East conflict escalation risks weighed against soft global demand expectations and strong non OPEC production. Crude fell back from a peak of $80.7/bbl on Friday with no impact on oil supply despite Red Sea tanker diversions as Houthi rebels vowed to continue to attack ships.

• Brent MAR 24 up 0.3% at 78.54$/bbl
• WTI FEB 24 up 0.2% at 72.84$/bbl
• Gasoil FEB 24 up 0% at 785.5$/mt
• WTI-Brent down -0.1$/bbl at -5.59$/bbl
• At least three tanker firms on Friday said they are going to suspend sending their ships via the southern Red Sea due to Houthi rebel attack escalations following US/UK air strikes on rebel positions in Yemen.
• Updated monthly oil reports IEA and OPEC this week may help to give clarity to the balance in 2024 and whether OPEC+ output cuts can offset a potential market surplus. Demand growth is expected to slow in 2024 with China considered a key driver of growth. China unexpectedly left the 1-year MLF rate unchanged when a 10bp cut had been forecast.
  • Brent MAR 24-APR 24 up 0.03$/bbl at 0.35$/bbl
  • Brent JUN 24-DEC 24 up 0.04$/bbl at 1.78$/bbl
• The Brent prompt crude spreads is holding gains seen so far this month, but the WTI spread has fallen back into contango after briefly rising to backwardation several times last week.
• Diesel and gasoline cracks showed robust gains last week amid US refinery outages and severe cold weather in the US this week. Gasoline cracks were up around 9% on the start of the week, with diesel cracks up 13.8%.
  • US gasoline crack up 0.1$/bbl at 16.48$/bbl
  • US ULSD crack down -0.3$/bbl at 39.33$/bbl