Crude Consolidates After Sharp Fall, Waiting For Payrolls

Oil prices are holding most of Wednesday’s losses with WTI up 0.5% to $84.65/bbl and Brent +0.6% to $86.35, close to intraday highs. Yesterday prices collapsed over 5% falling through key levels driven by technical selling and market fears re the demand outlook. Crude is now in a corrective cycle. The USD index is 0.2% lower.

• US EIA crude inventories fell 2.22mn barrels with distillate down 1.27mn but gasoline up 6.48mn, adding to concerns of falling demand, but refinery utilisation fell. Last week showed the lowest gasoline demand for the time of year in 25 years, according to Bloomberg. Nerves re the economic outlook contained in higher bond yields have also driven the change in direction for crude.
• OPEC’s unchanged stance on production cuts was unable to support the market.
• Later the Fed’s Mester, Kashkari, Barkin, Daly and Barr all speak. The ECB’s Lane and de Guindos also appear. Ahead of Friday’s payrolls US jobless claims and Challenger job cuts for September are released and there is also August trade data. US employment will be important for giving direction to the oil market.