Crude Down Sharply But Ends January On A High Due To Geopolitical Tensions

Oil trended lower through Wednesday to end sharply lower as weaker-than-expected US & China data and an EIA reported inventory build weighed on prices. The stock data was mixed though with levels at Cushing their lowest since November. The recovery in the greenback also pressured crude but there was little reaction to the Fed decision.

• WTI ended January 5.5% higher with the peak at $79.29/bbl late in the month driven by a Houthi attack on a tanker. Continued problems in the waters around Yemen have resulted in major rerouting around southern Africa, which has provided support for oil prices at the start of 2024. Brent rose 4.6% in January with the peak at $84.17.
• On Wednesday, WTI fell 2.5% to $75.85/bbl, close to the intraday low of $75.52. Support is at $74.76, 50-day EMA. Brent is down 2.4% to $80.53, holding above $80 through the day. Support is at $79.40.
• US President Biden has said that a response to the killing of 3 soldiers by Iran-backed rebels in Jordan has been decided but remains unknown. He said that he did not want an escalation of conflict in the region or a war with Iran. Iran has also called for diplomacy.
• EIA reported a crude inventory build of 1.23mn barrels due to refining outages (refinery utilisation -2.6pp) after falling sharply due to sub-zero temperatures impacting production and imports. But stocks at Cushing fell 1.97mn barrels. Distillate inventories fell 2.54mn but gasoline rose 1.16mn. Total US production rose 5.7% in the latest week.