Crude Correction Continues, But Supply Fundamentals Remain Tight

After falling over a percent on Wednesday due to a hawkish Fed and profit taking, oil is down another 0.7% during APAC trading today. While it is lower, it has still been moving in a narrow range of less than 50c. WTI has been below $90 through the session and is around $88.96/bbl and has broken $89 briefly a few times. Brent is about $92.84, off the intraday low of $92.77. The stronger dollar is also weighing on crude with the USD index up 0.2%.

• Brent is now 3.2% below Tuesday’s high but is still up 7% in September to date. While WTI is down 3.7% to be 7.3% higher this month. The climb higher until Tuesday was driven by tightening supply fundamentals and increased optimism on demand from the US and China. There are increased expectations that despite this correction oil will reach $100/bbl.
• According to Bloomberg, WTI’s 14-day relative strength index has fallen into correction territory but Brent’s prompt spread is still wider than last week signalling that there is tight supply.
• Later there are US jobless claims, Q2 current account, September Philly Fed and August existing home sales. The Bank of England, SNB, Riksbank and Norgesbank meet and all are expected to hike by 25bp. The ECB’s Lagarde and Schnabel are also scheduled to speak.