Crude Down Again As Demand Worries Dominate

Oil prices fell sharply after University of Michigan consumer sentiment came in weak reviving demand concerns, and consumer inflation expectations were higher than expected, increasing the risks of further rate hikes. Crude was down about 1.1% on Friday with WTI falling below $70. Prices are down slightly in early APAC trading with WTI at $70.02/bbl and Brent $74.08. The USD index rose 0.6%.

• With WTI around $70, it is moving closer to support at $68.43, the May 5 low. Support for Brent is at $71.28, the May 4 low. CFTC net oil positions rose marginally in the latest week.
• The crude market remains worried about the demand outlook with refiners’ margins lower than last year indicating weak demand and reduced purchases of Kazakhstan’s CPC blend (used by China & South Korea). On the supply side, Alberta’s output continues to be impacted by fires, OPEC+ has reduced output and Iraq’s supplies through Turkey are still limited. Iraq’s oil minister has said that OPEC+ isn’t planning of further production cuts.