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The prospect of more crude from Venezuela and higher US crude inventories has been pressuring the physical side; and the lack of WW3 as the first signs of aid reaching Palestinians in Gaza appears to be eating away at the geopolitical risk premia baked into the flat price.

WTI remains above its pre-Israel level; but that premium is fading…

Concerns about the conflict spreading more broadly have eased amid growing calls within Israel to rethink a ground invasion of Gaza.

However, the possibility remains of Washington ramping up compliance checks on sanctioned Iranian oil and Tehran disrupting key shipping routes.

But, the International Energy Agency (IEA) believes the current level of oil storage in member states is enough to satisfy supply disruptions (despite the agency’s total inventories shedding 182.7 million barrels over the course of 2022).

Additionally, on the supply side, Bloomberg reports Russia’s oil flows are climbing steadily as Moscow’s adherence to a pact with Saudi Arabia to keep barrels off the global market shows signs of waning.

Four-week average volumes have been rising relative to the reduced shipments target since the start of September, exceeding it by about 220,000 barrels a day in the most recent period.

On the demand-side, Eurozone macroeconomic data this morning was also borderline recessionary (but recent headline China and US data has surprised to the upside – whether you believe it or not).

Finally, as we detailed here, it appears hedge funds have shifted from shorting energy stocks (to near record levels) to shorting the commodity outright.

But, as Bloomberg reports, there is one hedge fund manager who is betting the other way.

Andurand said Saudi policy remains the deciding factor for crude prices and sees oil demand reaching a high later this decade, then trailing off.