Oil Summary at European Close: Brent Volatile on Unclear Middle East Claims

Middle East escalations have driven volatility in oil Friday. Overnight strikes by US forces initially boosted crude, before headlines on progress for ceasefire talks sparked a retreat. Further headlines that Israelis have ignored requests for a longer-term ceasefire have caused brent to regain some lost ground. However, brent remains down around 3.7% on the start of the week.

• Brent DEC 23 up 0.9% at 88.68$/bbl
• WTI DEC 23 up 0.9% at 83.93$/bbl
• Al Arabiya-Israel Refuses To Respond To Hamas 'Long Truce' Request: Saudi-based Al Arabiya posts on X that according to its sources, Israel has refused to respond to a 'long truce' requested by Hamas. This headline would seem to conflict with the earlier Al Jazeera headline that claimed negotiations were ongoing between Hamas and Israel. On both the Al Arabiya and Al Jazeera headlines there has been no further corroboration of their respective claims.
• Iran's Foreign Minster Hossein Amirabdollahian warned at the UN on Thursday that if Israel's retaliation against Palestinian militants Hamas in the Gaza Strip doesn't end then the US will "not be spared from this fire." - stoking tensions ahead of the latest strikes.
• Physical crude markets have been more reflective of underlying economic weakness, a factor adding as another drag on oil at present, with signs of weak economic demand such as poor refined fuel demand figures in Europe and crude stockpile builds in the US. Physical barrels of sweeter grades like WTI are also being impacted by its high gasoline yield.
• About 250kbpd of Venezuelan crude, currently going to Asia could be diverted to the US Gulf following last week’s sanctions easing according to Valero’s COO Gary Simmons Thursday.
• Kazakhstan could boost oil exports to Germany to 2mn t/yr, from 1.2mn t/yr vi the Druzhba pipeline, the Kazakh Energy Minister Almasadam Satkaliyev said, cited by Interfax.
• Some oil tankers are achieving over $100,000/day in Europe according to Baltic Exchange data reported by Bloomberg, surging to the highest levels since late 2022. The move is driven by ships travelling longer distances and a risk premium added because of Middle East escalations.
• North Sea Sverdrup crude loadings are set to rise to 755k b/d in December – up from 702k b/d in November according to a loading program seen by Bloomberg.
• Chevron aims to raise its production in Venezuela to 150,000 bpd by the end of the year – 15% above current levels according to company CFO Pierre Breber.