Crude Correcting With Supply & Demand Issues Not Too Far Away

Oil prices fell around 1.5% on Tuesday during the European session after it held up during APAC trading following disappointing China data. Concern re demand from the world’s largest crude importer and dollar strength weighed on oil in the end. It found a floor during the NY session, as US yields came off their highs. The USD index finished flat.

• WTI fell 1.7% and finished at $81.08/bbl in what is seen as a corrective pullback from technical trends. It has started APAC trading slightly lower at $80.98. It found support around $80.50 with the intraday low at $80.40. Support is at $78.69, August 3 low.
• Brent fell 1.4% to close at $85.03. It reached a low of $84.29, lowest since August 8, but breaks below $84.50 were brief. Support is at $82.36.
• Bloomberg is reporting that API data is showing a US crude drawdown of 6.2mn barrels last week, according to people familiar with the numbers. Gasoline fell 761k but distillate increased 658k. The official EIA data is out later today.
• European LNG prices rose 16.2% on Tuesday. It broke through EUR40 briefly. The market is still concerned that there will be strike action at Australia’s Northwest shelf facilities. Talks are ongoing but if there isn’t progress by week end then industrial action may start. The dispute has begun to impact North Asian prices which rose 0.5% on Tuesday and 2.3% since August 8.