December 30, 2023 [Quantum Commodity Intelligence]-Crude oil futures Thursday were lower with oil flows continuing despite shipping disruptions around the Red Sea, although prices steadied after upbeat data on US crude inventories was released by the EIA.
Front-month Feb24 ICE Brent futures were trading at $78.59/b (1705 GMT), compared to Wednesday’s settle of $79.64/b, while the more-liquid Mar24 contract was trading at $78.37/b versus the previous close of $79.54/b
At the same time, Feb24 NYMEX WTI was trading $73.10/b, versus the day’s low of $72.69/b and Wednesday’s settle of $74.11/b.
Prices lifted off lows after data from the Energy Information Administration (EIA) showing US commercial crude stocks falling nearly 7 million barrels last week, countering the earlier API report that calculated a 1.84 million barrel increase.
Brent had rallied above $81/b early in the week after the latest wave of attacks against commercial shipping around the Red Sea, along with a strike against a chemical tanker close to the Indian coast.
But analysts said that while the threat to shipping is no doubt disrupting energy supplies in the form of longer journeys, there has been no direct impact on oil production.
Danish shipping giant Maersk said in its latest update it had scheduled a number of container vessels to transit the Suez Canal and Red Sea next month under the protection of the US-led naval task force, which could signal a wider return among other operators.
However, Bloomberg reported that around half of the container-ship fleet that typically transit the Red Sea and Suez Canal is avoiding the route now because of the threat of attacks from Houthi militants.
Physical
Meanwhile, oil futures have found little support from the physical market as the overhang of Atlantic Basin crude, including unsold West African cargoes and a heavy year-end US export schedule, weighed on sentiment.
In the products sector, Asia’s gasoil cracks have slumped this week to five-month lows amid plentiful supplies. Gasoil is the key product for Asian refineries, so a slump in distillate margins is often the precursor for run cuts.
US prices had wobbled in earlier trade after data from the American Petroleum Institute revealed crude inventories increased by 1.837 million barrels, compared to the Reuters poll that called for a drop of around 2.7 million barrels.
Oil markets found only limited support from this week’s broader risk-on appetite amid the US bond and stocks rally, while the Dollar Index sunk to six-month lows of around 101 points on rate cut hopes.
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