Crude Continues To Climb As Market Tightens & Geopolitical Risks Persist

Oil prices have rallied around 0.5% during APAC trading as risk appetite has improved and China’s IP and fixed asset investment rose more than expected in January-February. WTI is up 0.4% to $81.39/bbl, close to the intraday high, and Brent +0.4% to $85.65/bbl breaking above resistance at $85.53 opening up $86.52. The USD index is flat.

• The market remains nervous re attacks on energy infrastructure in key producing countries. Last week the Ukraine struck a major Russian refining facility and over the weekend Russia’s defence ministry said it had destroyed drones targeting refineries in a number of regions, but according to Bloomberg a number were hit. These strikes are putting upward pressure on diesel prices.
• Given oil’s move higher on the back of continued geopolitical issues and the IEA’s upward revision to global demand, Morgan Stanley has revised up its Q3 Brent forecast by $10 to $90/bbl. Brent’s timespread has widened signalling further tightening of the market.
• The focus of the week for oil markets will be Wednesday’s Fed meeting. There is also the CERAWeek conference in Houston, comments from speakers will be watched closely.
• The key data release later is euro area February CPI but there are also US NY Fed services and NAHB housing. The ECB’s Buch speaks.