Oil futures: Crude tumbles as geopolitical tensions ease, Brent around $90/b

17 Nov 2022

Quantum Commodity Intelligence - Crude oil futures Thursday were sharply lower, extending the previous session's losses following an easing of geopolitical tensions and the speedy resumption of operations on a key oil pipeline that supplies central Europe from Russia.  

Front-month January ICE Brent futures were trading at $90.16/b (1800 GMT), compared to the day's range of $89.70-$92.91 and Wednesday's settle of $92.86/b.

At the same time, Dec22 NYMEX WTI was trading $81.76/b versus Wednesday's settle of $85.59/b.

"Oil prices declined after flows from the Druzhba pipeline resumed and preliminary analysis of the missile that killed two in Poland was likely an errant missile fired by Ukraine's defense system," said Ed Moya, senior market analyst at brokerage Oanda.

"It looks like we aren't seeing an immediate escalation from the Russians and that has tentatively removed some of the short-term supply risks," added Moya.

Oil prices rowed back after NATO member Poland and the head of the military alliance both said that a missile strike on Polish territory appeared to be unintentional and was likely launched by air defence systems in neighbouring Ukraine.


Markets briefly found support after the midweek release of EIA data showing US commercial crude inventories drained 5.4 million barrels in the week to 11 November as runs ticked up and imports fell, in addition to a 4.1 million fall in strategic reserves.

It pushed total US stocks down 9.5 million barrels – the largest weekly draw in three months – to a 21-year low of 827.5 million barrels.

However, this was offset as stocks of distillates increased during the second week of November as demand tumbled 7%. Inventories rose by 1.1 million barrels – its sharpest weekly rise since mid-September – to a seven-week high of 107.4 million barrels in the week to 11 November.

Markets also shrugged off tanker tracker data from Petro-Logistics showing OPEC shipments were down by more than 1m bpd in the first 15 days of November, suggesting overall OPEC+ could be more than the expected 1 million bpd combined.

In Asia, China continues to tackle the latest Covid outbreaks as new cases reached 23,132 new cases on Wednesday, with the surge driven mostly by major cities.

Meanwhile, the Brent/Dubai cash spread raced to a fresh five-month high Wednesday as European refiners scramble to secure replacement barrels ahead of looming sanctions, while sluggish demand in Asia and increased competition from Russian barrels have weighed on East of Suez markets.  

Quantum assessed the Brent/Dubai cash spread for January at $5.95/b on 16 November at the 1630 Singapore market close, the widest spread since late May when the then front-line Jul22 spread briefly topped $7/b.