Crude Buoyed By Rate Cut Prospects & US Inventory Drawdown

Oil prices have made up some of Wednesday’s losses during APAC trading. Technical selling had been triggered as crude flashed overbought but with the Fed not ruling out a cut in May/June and EIA data pointing to solid US fuel demand and lower inventories, fundamentals have driven crude higher again today. The USD index is down a further 0.2% today after -0.4% yesterday, which is supportive of dollar-denominated commodities.

• WTI is up 0.7% today to $81.81/bbl, close to the intraday high. It has been trending higher through the session. Brent is also 0.7% higher at $86.58.
• The Fed continues to expect three 25bp rate cuts this year which has helped risk appetite and improved the demand outlook for crude.
• EIA reported a US crude stock drawdown of 1.95mn barrels last week, more than expected and below the 5-year seasonal average. Gasoline inventories fell 3.31mn barrels while distillate rose 624k. Demand for fuel remains solid.
• Later the Fed’s Barr participates in a fireside chat and in terms of US data Q4 current account, jobless claims, preliminary March PMIs and Philly Fed are released. The ECB’s Buch appears and the BoE and SNB decisions are announced. European preliminary March PMIs print.