Crude Falling Towards Early August Lows As Demand At Fore Again

Oil prices fell around 2% on Wednesday impacted by the general deterioration in risk appetite and thin summer trading, but also the stronger dollar. The USD index finished 0.2% higher after the FOMC minutes showed most members saw “upside risks to inflation”. Crude took another leg down after this on the risk that US rates may rise again. China and US demand concerns have come to the fore again.

• WTI broke below $80 during the NY session falling 2.1% and closing at $79.26/bbl. It is currently trading slightly lower at around $79.20. It reached a low of $79.05. It has now lost 4.8% this week so far. It is approaching support at $78.69, August 2 low.
• Brent fell 1.8% closing at $83.33 after a low of $83.13. It has lost 4% this week. It broke support at $82.36 which opened up $81.05, 50-day EMA. UBS has increased its year end Brent forecast $5 to $95/bbl.
• US crude output rose 0.8% last week with refinery runs at their highest since January 2020. EIA reported a 5.96mn barrel US inventory draw bringing levels to their lowest since early January. Gasoline stocks fell 262k but distillate rose 296k. The sharp drop in US inventories failed to support the market given demand concerns.