Crude Continues To Slide On Demand And Supply Uncertainties

Oil prices slumped over 4% on Tuesday after falling around 2.5% the previous day. Brent fell 3.8% to $77.70/bbl, close to the intraday low of $76.89, and WTI -4.4% to $71.33. Continued financial concerns, demand uncertainty from both the US and China, and supply concerns have put pressure on prices. The USD index is down 0.1%.

• WTI broke through the March 13 low of $72.30 and is now close to the bear trigger at $70.86, the December 9 low. Brent is through $78.34 and $77.76, which opens the bear trigger at $76.04, the December 12 low.
• OPEC forecasted in its latest monthly report a small surplus in Q2 due to a seasonal pullback in demand. It expects to produce about 300kbd more than is needed even with production cuts. The surplus could be larger if Russian production remains resistant to sanctions.
• Estonia, Poland and Lithuania are calling for the price cap on Russian oil to be reduced to $51.45 from $60 to put more pressure on Russia’s finances. The cap will be reviewed by the EU this month.
• Supply in Kazakhstan had been cut by up to 200kbd due to maintenance but yesterday Bloomberg reported that production has resumed at its largest field.
• API inventories rose 1.155mn barrels last week but gasoline fell 4.587mn and distillate 2.9mn, as maintenance continues to impact stockpiles.