Crude Breaks Resistance Levels As OPEC Expects Robust Demand

Oil prices rose on Tuesday on OPEC expectations of a pickup in oil demand this year as they are confident about consumption in China and India. Continued geopolitical problems also provided support. Crude dropped briefly following the stronger-than-expected US CPI data but the associated rise in the greenback (USD index +0.6%) and drop in equities didn’t stop prices rising.

• WTI is up 1.2% to $77.83/bbl, off the intraday high $78.47, which cleared $78.14 and opened up key resistance at $79.29. It is now 2.6% higher this month and trading above the 50-, 100- and 200-day simple moving averages.
• Brent is 0.8% higher at $82.62/bbl after a high of $83.24 clearing resistance at $82.86 and opening $84.17, key resistance. It is now up 2.7% in February.
• OPEC is forecasting an increase in oil demand in 2024 of 2mbd, unchanged from the previous report. The Secretary General Al Ghais said that output from Guyana, Brazil and Canada is increasing and that US shale production continues to surprise, and so OPEC+ will “continue to be very preemptive, proactive”.
• The OPEC report showed that its new output cuts were only partly adhered to. The decision on whether to extend the reductions into Q2 will be made in early March.
• Tanker tracker data are showing that around half of the 50 tankers carrying Russian oil that US Treasury sanctioned in October haven’t loaded since then in a sign that a tightening of sanctions is having an effect, according to Bloomberg.
• Bloomberg is reporting that there was a higher-than-expected crude inventory build of 8.52mn barrels but gasoline stocks fell 7.23mn, according to people familiar with the API data. Inventories have been volatile since a cold snap impacted flows and refining in January.