Crude Continues To Sink But In Oversold Territory Now

After falling over 2% on Friday and then 1.6% yesterday, oil prices are down another 0.5% during APAC trading today a China growth concerns persist and the US dollar strengthened, although it is now off its intraday high to be little changed. WTI is down 0.5% to $75.46/bbl, close to the intraday low, and Brent -0.4% to $79.45, holding just above initial support.

• Pessimism re the outlook for China has been driving crude lower. Citigroup revised its GDP forecasts down and as a result H2 imports are also likely to be soft, according to Bloomberg. This is consistent with US light sweet crude to Asia priced at a discount.
• The 9-day relative strength index is signalling that both benchmarks are now oversold, according to Bloomberg.
• Last week the EIA reported that US crude inventories fell for a fourth consecutive week. Industry data from API is released today and EIA on Wednesday and will be watched to see if the trend continued. The Fed decision on Wednesday and payrolls on Friday will also be key to the outlook.
• OPEC holds it review meeting on Thursday and while market participants are divided over whether there will be changes to production targets, the 6.5% drop in oil prices this month may still prompt some caution. Delegates have said ahead of the meeting though that they are unlikely to recommend any alterations to the current plan to reduce output cuts from Q4, which have made the market nervous.
• Later there are US May housing data, June JOLTS job openings and July consumer confidence and in Europe, euro area Q2 GDP, July economic sentiment and German preliminary July CPI.