Volatile Crude Pulls Back as Middle East Risks Considered

Crude market uncertainty continues as front month prices pull back from gains seen since late Friday as negotiators agreed on a framework for the release of the remaining American and Israeli hostages. The market is assessing the risks of escalation in the Middle Eastern conflict and increasing attacks on Russian energy infrastructure against demand concerns amid a weak property sector in China.

• Focus this week is on events in the Middle East, OPEC+ ahead of the JMMC meeting on Thursday and central bank rate decisions.
• Negotiators from Israel, the US, Egypt and Qatar have agreed on a framework for the release of the remaining American and Israeli hostages, according to a NBC News source. The deal, agreed in French capital Paris, will see the release of Hamas-held hostages in phases, accompanied by pauses in fighting and aid deliveries to Gaza.
• OPEC+ appears to be making a slow start to its new output cuts, according to Kpler. Exports this month appear to be largely unchanged on December, even though they should be down around 0.9m b/d.
• Time spreads are following the move and softening slightly although the curve remains in backwardation. The Brent second month call-put skew has been holding between about -2.65% and -2.1% since the middle of Jan.
  • Brent MAR 24 down -1.4% at 82.36$/bbl
  • WTI MAR 24 down -1.5% at 76.87$/bbl
  • WTI-Brent up 0.03$/bbl at -5.53$/bbl
  • Brent MAR 24-APR 24 down -0.01$/bbl at 0.59$/bbl
  • Brent JUN 24-DEC 24 down -0.1$/bbl at 2.66$/bbl
  • WTI MAR 24-APR 24 down -0.02$/bbl at 0.13$/bbl
  • WTI JUN 24-DEC 24 down -0.16$/bbl at 2.71$/bbl