Red Sea Shipping Risks Supporting Crude Markets
Oil edges higher to start the week with support from persistent Red Sea shipping threats after attacks last week and as shipping lines suspend transit through the region. The shipping risks combined with signals from the US Fed for cuts in 2024 and US dollar weakness to boost crude late last week from the lowest Brent since June of 72.29$/bbl on Dec 13.
- Brent FEB 24 up 0.8% at 77.14$/bbl
- WTI JAN 24 up 0.9% at 72.04$/bbl
- Gasoil JAN 24 up 0.4% at 767$/mt
- WTI-Brent up 0.02$/bbl at -4.78$/bbl
- Shipping risks in the Red Sea are increasing with two attacks on Friday. MSC Mediterranean Shipping Co and CMA CGM SA over the weekend joined Maersk and Hapag Lloyd to suspend Red Sea activities due to ongoing attacks from the Houthis in Yemen.
- Egypt’s Suez Canal Authority said it’s “closely following” tensions in the Red Sea after US military on Saturday said it shot down 14 drones launched from Houthi-controlled areas of Yemen.
- Downside pressure comes from strong US and Russia production, continued scepticism towards OPEC+ output cuts, and the uncertain global economic outlook.
- Brent FEB 24-MAR 24 down -0.01$/bbl at -0.22$/bbl
- Brent JUN 24-DEC 24 up 0.08$/bbl at 1.06$/bbl
- Crude curve backwardation has also been supported but the near term Brent and WTI spreads remain in contango suggesting ample supplies and the longer term Jun24-Dec24 spreads are still well below levels from the start of December.
- Gasolione cracks are holding most of their gains from last week although have softened from their highs on Friday while diesel cracks have also found some support after drifting slightly lower in early December.
- US gasoline crack down -0.2$/bbl at 17.77$/bbl
- US ULSD crack up 0.1$/bbl at 38.59$/bbl