Oil Edges Higher as Middle East Risks Offset Demand Concern

Oil is holding onto gains from yesterday supported by risks from Middle East escalations within the Red Sea and after a terrorist attack near the grave site of Iranian commander Qassem Soleimani in the central Iranian city of Kerman.

• Brent MAR 24 up 0.7% at 78.78$/bbl
• WTI FEB 24 up 0.9% at 73.37$/bbl
• Gasoil JAN 24 down -0.1% at 772.5$/mt
• WTI-Brent up 0.06$/bbl at -5.26$/bbl
• Libya oil protests forcing the partial reduction in production at fields worth 365kb/d and a large draw in US crude stocks from the API yesterday are also supportive.
• Downward pressure comes from uncertain demand growth this year and fading sentiment for the pace of central bank rate cuts.
• The US and its allies have warned the Houthis that there will be consequences if they don’t stop attacking ships in the Red Sea. The UN said that 18 companies have now rerouted ships.
• A premium of $3-4/bbl could be added to oil prices from a prolonged and full disruption to Red Sea flows according to Goldman Sachs via Bloomberg. It expects Brent in the $70-90/bbl range over 2024 on elevated spare capacity, low recession risk and strategic reserve purchases.
  • Brent MAR 24-APR 24 up 0.04$/bbl at 0.15$/bbl
  • Brent JUN 24-DEC 24 up 0.12$/bbl at 1.77$/bbl
• Diesel and gasoline crack spreads are also edging higher this week ahead of the updated EIA US inventory data today and despite large builds suggested by the API data yesterday.
  • US gasoline crack up 0.2$/bbl at 17.6$/bbl
  • US ULSD crack up 0.1$/bbl at 36.51$/bbl