Central Bank Sentiment Pressures Crude Markets Friday

Oil markets have extended losses today facing downward sentiment from the outlook of central banks this week as they warn of further rate rises. Oil was down over 3% earlier in the session.

• Despite the dip, oil futures remain up on the week.
• Bloomberg reports indicate a slowdown in oil from Russia to Asia but the impact of the EU import ban has been more muted than originally anticipated with Urals trading well below the $60/bbl G7 cap - allowing the use of western insurance and shipping services.
• Signs that US inflation has slowed and the opening up of the Chinese economy serve as key upsides for oil in the weeks ahead, though EIA data earlier this week showed sizeable oil builds. The International Energy Agency projects Chinese oil demand growth recovering next year by nearly a million barrels per day (bpd) after a 2022 contraction.
• Chinese re-opening optimism is being balanced against surging infection rates.
• J.P.Morgan Commodity Research forecast the US will start replenishing the SPR with initial purchases of around 60 million barrels over 1H23.
• Brent FEB 23 down -2.8% at 78.97$/bbl.
• WTI JAN 23 down -2.6% at 74.12$/bbl.