Crude Continues Rally On Market Tightness But Overbought

Oil prices have risen further during APAC trading today on the back of the IEA report showing a 1.2mbd deficit in H2 2023. The market has looked through EIA data showing that US crude inventories rose strongly in the latest week. WTI is up 0.5% to $88.95/bbl but has failed to break above $89 with the peak at $88.99. Brent is also 0.5% higher at $92.33 and has traded above $92 throughout the session. The USD index is down 0.2%.

• While JP Morgan and RBC don’t expect prices to reach $100, ANZ said today that they do it will reach this level by year end given that the market is “decidedly tight” over the coming two to three quarters. ANZ expects a deficit of 2mbd in Q4 and that Saudi cuts will be extended into Q1 2024.
• In terms of LNG, Australian unions have said that there has been a “significant escalation” in industrial action at Chevron facilities today but whether to engage in full 24 hour strikes is being decided separately at each of the three facilities impacted. Chevron has said that it will manage the uncertainties the action is creating. Exports are yet to be affected.
• Later today the ECB decision is announced followed by a press conference. It is expected to be a close call (see MNI ECB Preview - September). August US retail sales print and excluding autos & gas are expected to fall slightly. There are also jobless claims, August PPI and July business inventories.