Oil futures: Crude rebounds on geopolitical tensions, N.Sea outage
Quantum Commodity Intelligence – Crude oil futures Monday were sharply higher as benchmarks rebounded from the post-US election lows as risk-on sentiment returned.
Front-month Jan25 ICE Brent futures were trading at $72.85/b (1730 GMT), compared to the day's low of $70.70/b and Friday's settle of $71.04/b.
At the same time Dec24 NYMEX WTI was trading at $68.72/b, versus Friday's settle of $67.02/b.
Prices initially recovered following a decision by the Biden administration to allow Ukraine to use long-range American missiles against Russia, heightening geopolitical tensions.
Russia's President has Putin previously warned that Moscow would view a strike inside Russia with ATACMS missiles supplied by the US as a "direct participation" of NATO countries in the Ukraine war.
In the latest retort, the Kremlin-controlled Rossiyskaya media outlet said one potential response could be for Russia to provide weapons for Yemen's Houthi rebels to target western interests in the Red Sea.
Crude was given a further jolt upwards following reports of an unscheduled shutdown at 7500,000 bpd Johan Sverdrup North Sea oil field.
The rebound comes after prices retreated around 4% last week on concerns that policy under a Trump administration could start a tariff-led trade standoff, slowing global growth, while rolling out favorable mandates towards US oil and gas producers.
Markets also wobbled after the IEA flagged a global surplus of 1 million bpd, citing cooling demand, leaving OPEC+ with a dilemma on whether or not to go ahead with planned increases starting in January.
"Sentiment towards crude oil is increasingly turning bearish amid growing signs of excess surplus from non-OPEC producers. And if OPEC+ decides against extending their production agreement next month, then we could be looking at subdued price levels in the coming months," commented City Index analyst Fawad Razaqzada.
Physical
Middle East producers received a further blow as premiums for medium sour crudes slumped to yearly lows, booking in a near-certain reduction in Saudi OSPs for January.
The widely-watched Al Shaheen crude tender for January was awarded by QatarEnergy at Dubai swaps +$0.40/b-$0.75/b, the lowest in 11 months and further illustrating sliding demand.
Anemic growth rates in China remain the biggest concern as crude throughputs dropped to 14 million bpd in October, representing a 7% decline compared to the same month last year.
