Oil Edges Down from Highs with Focus Still on Middle East

Crude is drifting down from a Brent front month peak of 82.45$/bbl on Friday amid thin trading volumes due to holidays in Asia.

• Brent APR 24 down -0.4% at 81.88$/bbl
• WTI MAR 24 down -0.4% at 76.53$/bbl
• Gasoil MAR 24 down -0.4% at 878.75$/mt
• WTI-Brent up 0.02$/bbl at -5.4$/bbl
• Iran has commented that progress is being made to find a “diplomatic solution” to the situation in Gaza including the release of Israeli hostages, according to Bloomberg.
• Global supplies remain robust due to strong non-OPEC supply and scepticism that OPEC members will stick to quotas. Production from the US Permian Basin of West Texas and New Mexico is expected to rise almost 5% before year-end according to operator Plains All American Pipeline.
• Updated monthly oil reports from OPEC and IEA this week may help to give clarity to the balance in 2024 and whether the OPEC+ output cuts can offset a potential market surplus amid potential slower global oil demand growth this year.
  • Brent APR 24-MAY 24 unchanged at 0.58$/bbl
  • Brent JUN 24-DEC 24 down -0.13$/bbl at 2.58$/bbl
• Crude curve backwardation has softened slightly with time spreads edging down from highs last week. The Brent prompt spread reached the highest since early November on Feb 9 while the WTI prompt spread returned to a narrow backwardation.
• Gasoline and diesel crack spreads are also very slightly weaker but are still holding onto most of the gains seen so far this month due to tighter supplies amid Red Sea diversions and refinery maintenance as well as drone attacks on Russian energy infrastructure.
  • US gasoline crack down -0.1$/bbl at 21.35$/bbl
  • US ULSD crack down -0.3$/bbl at 46.9$/bbl