Oil futures: Crude edges up, Brent consolidates above $80/b
Quantum Commodity Intelligence – Crude oil futures Thursday rebounded from the lowest levels since July as Brent limped back above the psychologically important $80/b mark, which some analysts see as a soft floor price for OPEC+ producers.
Front-month Jan23 ICE Brent futures were trading at $80.36/b (1725 GMT), compared to Wednesday's settle of $79.54/b, while the Jan24/Feb24 spread was around $0.20/b.
At the same time, Dec23 NYMEX WTI was trading $76.06/b versus Wednesday's settle of $75.33/b.
Brent has lost around $4/b this week alone, while the North Sea benchmark has also slumped some 12% since the peaks in the immediate aftermath of the 7 October Hamas-led attack on Israel, with the so-called risk premium entirely wiped out as perceived oversupply and economic headwinds come back into focus.
"The market is clearly less concerned about the potential for Middle Eastern supply disruptions and is instead focused on an easing in the balance," said Warren Patterson, head of ING's commodity research.
"Prompt time spreads have weakened, suggesting a less tight physical market. And while there are clear demand concerns hovering over the market, supply dynamics have also played a role," added Patterson, noting Russian seaborne crude exports have grown in recent months, indicating that Russia is not sticking to its additional voluntary cut.
In particular, large flows of US export crude are expected to weigh on global markets.
Cuts
Saudi Arabia and Russia had reiterated over the weekend that current cuts will remain until the end of the year, but traders took little notice with the plans already flagged several times, while Brent futures and the Middle East Dubai benchmark have already moved on to January contracts.
"Frequent reminders that Saudi Arabia and Russia will maintain cuts until the end of the year aren't doing anything to offset this as it was never assumed they would change their minds. Especially now prices are falling. An extension announcement later this month could give oil prices a boost," said Craig Erlam, an analyst at brokerage Oanda, referencing the 26 November OPEC+ meeting.
Prices were also weighed down this week by a near 12 million barrel crude stock increase reported by the API, while weak trade data from China also added to the bearish outlook.
The Middle East conflict remains focused largely on Gaza, although analysts said that contagion could not be ruled out with US-led moves to broker a ceasefire so far failing.
On Wednesday, Israel's Prime Minister Benjamin Netanyahu reiterated there would be no ceasefire in Gaza without the release of hostages first, dismissing 'idle rumours' about imminent ceasefire for a hostage deal.
Regional reports had indicated a deal was close for a limited release of hostages in exchange for a multi-day pause in fighting to provide humanitarian aid.
