Crude Weighs Supply Risks Against Weaker US Demand

Crude markets are edging higher today but within the range for the week after seeing Brent bounce between about 74.8$/bbl and 79.4$/bbl since the start of the year. Markets are weighing supply risks from the Middle East and Libya against strong non-OPEC supply such as from the US and with estimates of slowing global demand growth in 2024 compared to 2023.

• Brent MAR 24 up 0.3% at 77.85$/bbl
• WTI FEB 24 up 0.5% at 72.55$/bbl
• Gasoil JAN 24 up 1.2% at 763.75$/mt
• WTI-Brent unchanged at -5.18$/bbl
• US inventories yesterday showed a bigger than expected crude draw and large gasoline and distillates stocks builds with signs of weak demand and with crude production remaining strong despite a small dip on the week.
• Red Sea attacks show no signs of abating with 19 drones and missiles launched by Iranian-backed Houthis shot down by US-led force in the Red Sea in less than a month, according to the commander of the US Navy.
• Protests have disrupted production at Libya’s Sharara and El Feel oil fields this week with a potential halt of a combined volume of 300kbpd.
  • Brent MAR 24-APR 24 up 0.04$/bbl at 0.22$/bbl
  • Brent JUN 24-DEC 24 up 0.08$/bbl at 1.78$/bbl
• Crude time spreads have strengthened in the last couple of days with the prompt Brent spread holding a narrow backwardation while the WTI spread narrows back slightly closer towards parity but remains in contango.
• Gasoline cracks fell yesterday to reverse much of the gains seen over the previous two weeks after US distillates and gasoline stocks showed significant builds driven by a drop in the weekly implied demand data during the holiday week.
  • US gasoline crack down -0.3$/bbl at 16.15$/bbl
  • US ULSD crack down -0.2$/bbl at 36.35$/bbl