Crude Down But Fundamentals Remain Supportive

Oil prices have been trading in a narrow range during APAC trading but are down on the NY close. Brent is down 0.7% to around $86/bbl close and WTI is down 1.1% to $79.25, both are close to their intraday highs. The USD DXY is down 0.2%.

• Brent is trading above both the 50- and 100-day simple moving averages. The bull trigger is at $89 while support is $83.05, the February 9 low. WTI faces support at $76.52, the February 9 low, and initial resistance of $80.33, the February 10 low.
• Oil had rallied on news of Russia cutting output in response to sanctions but has now dropped again after the US DOE announced that it would sell 26mn barrels from its strategic petroleum reserve to offset the Russian cut. But going forward the market should be supported by improving Chinese demand, improved outlook for OECD growth and the cut to Russian output.
• Later US CPI data for January print and the annual rates are expected to ease further but headline could see a pick up in the monthly change to 0.5% m/m from 0.1% the previous month. The API also releases weekly inventory data and OPEC publishes its monthly market overview.