Benchmarks Lower

Oil has slipped in Asia-Pac trade; WTI down $0.28 at $52.58, brent is down $0.33 at $55.48. The commodity complex was dragged lower by a broad wave of negative sentiment that exerted influence across the asset classes.

• Developments in inventory data helped to stem the downside. Data from the DoE yesterday showed headline inventories saw a draw of near 10mln bbls, but a build in gasoline stocks and a decent rally in the greenback countered any oil strength. It should be noted that at these levels supplies are about 5% higher than the five-year average for this time of year.
• Some concerns over fuel consumption have also weighed on oil, China has urged residents to limit travel for LNY while figures yesterday showed traffic in LA has fallen in the past month.
• Comments from the IMF added to downward pressure. In their report the IMF said slow vaccine distribution and vaccine shortages could threaten financial stability. This combined with talk of vaccine shortages has cast doubt on a swift recovery.
• It is not all negative though, JP Morgan says brent could rise above $70/bb by the end of the year, citing tighter supply. The note predicted global oil market should tighten rapidly from February and supply will remain very tight through mid-2022.