Oil Summary at European Close: Crude Falls Sharply

Crude prices have retreated on the day, eroding much of the war premium driven by Wednesday’s Netanyahu ground invasion comments. Brent bottomed out at $87.55/b just after the ECB's decision to hold rates before regaining some ground following US economic data. The focus has turned to a weaker demand outlook.

• Brent DEC 23 down -1.7% at 88.64$/bbl
• WTI DEC 23 down -1.9% at 83.75$/bbl
• The Israel-Hamas conflict escalated further overnight – with confirmation that the Israeli military had put a “relatively large” contingent of troops and tanks into northern Gaza in order to attack several Hamas militant targets in the area. While the incursion at present looks short of a full ground operation in the territory, it has caught markets by surprise given US pressure on the Israeli government to delay and full invasion.
• Venezuela’s primary opposition leader Maria Corina Machado has claimed victory this week, she remains banned to run by Maduro’s government – something which risks the recent US oil sanctions relief.
• The ICE Brent Dec23 Option Expiry is today at 19:30BST close.
• The oil futures market may have priced in a war premium in recent weeks, but the fall today is more reflective of the sell-off observed in the physical market.
• Global oil inventories, both commercial and in SPRs – have fallen the lowest level since at least January 2017 to 3.31bn barrels this month according to Kpler data.
• The recent sanctions action taken by the US against two vessels found to be carrying Russian oil above the G7 price cap has pushed more volumes onto the ghost fleet according to Reuters sources.
• Angola is set to load 1.1m b/d of crude in December, its lowest level since September, according to the final loading schedule reported by Bloomberg.
• MNI COMMODITY ANALYSIS: Russian Crude Exports Breaching Commitments as Refining Still Lags. Full piece here: https://enews.marketnews.com/ct/x/pjJscQOKn-0I6ag0dhp-HA~k1zZ8KXr-kA8x6nEWJ6lptIPjO1OcQ