Crude Falls To Lowest In A Month

Oil prices fell almost 1.5% on Wednesday as demand concerns driven by weak European PMI data and signs of possible increased supply drove the market. Even lower Treasury yields & USD, better risk appetite and lower US crude stocks didn’t help (USD index -0.2%).

• WTI fell 1.4% to close at $78.56/bbl, the lowest in a month. It has started APAC trading slightly higher at $78.59. It spent Wednesday below $80 with a high of $79.91 and a low of $77.62, which breached support at $78.33 and opened up $77.36, the 50-day EMA.
• Brent fell 1.3% to $82.93 after a low of $81.93 and high of $84.26. It breached support of $82.36 and the next level is $81.62, the 50-day EMA.
• EIA data showed a drawdown in US crude stocks of 6.13mn barrels in the latest week after -5.96mn, more than expected. Inventories are now their lowest since December 2022. There was a 594k barrel increase in the SPR. US refining capacity was 94.5% and gasoline inventories rose 1.47mn barrels and distillate +0.95mn
• Also on the supply front, the US is working to ease sanctions on Venezuela’s oil exports and thaw relations with Iran, which could add more supply onto the market. Talks continue to allow Iraqi oil to be shipped from Ceyhan in Turkey. On the other hand, Saudi Arabia is likely to extend its voluntary 1mbd output reduction to October, particularly if prices continue to weaken.