Crude Continues Falling As Risk Sentiment Dominates Middle East Conflict

Oil prices have continued lower during today’s APAC session as US dollar strength (USD index +0.1%) and the risk off move continued to outweigh tensions in the Middle East. WTI has traded below $72 for most of today and is currently down 0.8% to $71.81/bbl. Brent has been unable to break above $78 and is now 0.7% lower at $77.75.

• China’s Q4 growth came in slightly below expectations, which has also put downward pressure on crude. It is the world’s largest importer of oil.
• While crude markets are yet to price in a war premium, developments in the Middle East are being monitored closely with Houthi attacks on Red Sea shipping continuing and driving more vessels to take other longer routes and Iran’s attacks on northern Iraq. The risk of the conflict spreading remains a distinct possibility. But currently the issues in the region haven’t impacted oil supply.
• OPEC’s monthly report is published today and there are also US industry inventory data.
• The Fed’s Williams, Barr and Bowman speak plus the Beige Book is published. On the data front US December retail sales, trade prices, IP and NAHB housing index are all released as well as December euro area/UK CPI. ECB President Lagarde participates in a dialogue at the World Economic Forum.