Crude Continues Trending Lower Despite Strong US Stock Drawdown

Oil prices trended lower through Wednesday’s European/US sessions as the geopolitical risk premium continued to unwind. The stronger greenback (USD index +0.1%) driven by higher yields also weighed on crude. Q1 US GDP data including core PCE prices out later today will be key to the Fed outlook, which impacts oil.

• WTI fell 0.7% to $82.85/bbl and has started today slightly lower at $82.79. It spiked to $83.58 following the larger-than-expected crude drawdown in the US but the move was short lived and it fell to its intraday low of $82.44. Initial support is at $80.85, 50-day EMA, with the bull trigger at $86.97.
• Brent is down 0.5% holding just above $88/bbl. It rose to $88.76 following the EIA data before falling to $87.65. The benchmark appears to be in a corrective cycle with initial support at $85.66, 50-day EMA, while the bull trigger is at $92.18.
• EIA reported that crude stocks fell 6.37mn, the largest drop since January and more than expected. Gasoline inventories fell 634k but distillate rose 1.61mn barrels last week. Refinery utilisation rose 0.4pp to 88.5%. Gasoline demand was down moderately.
• Houthi rebels in Yemen announced that they had attacked a US warship and two commercial ships using drones and missiles on Wednesday. Maersk said its targeted vessel and crew were fine and heading to the next port with protection. The last attack they claimed was two weeks ago.