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Crude Headed For Strong Q1 Rise

OIL
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Oil prices are higher during APAC trading today after being little changed on Wednesday but they are off their intraday highs. Prices recovered after dipping on Governor Waller’s comments that the Fed should wait before easing. WTI is up 0.5% to $81.72/bbl after approaching $82, and Brent is 0.3% higher at $86.36 after reaching a high of $86.58. The USD index is unchanged.

  • Oil prices look likely to end March around $10/bbl higher than the end of 2023 or around 13% higher. March itself probably saw an increase just over 5% on the month. Prospective Fed easing, geopolitical tensions, improved demand prospects and OPEC supply cuts buoyed prices but there remains a lot of uncertainty around China’s consumption and OPEC members’ quota compliance. Sentiment is positive going into Q2 though.
  • OPEC has extended its 2mbd output cuts to end June and quotas will be reconsidered in June. Next week’s review meeting is unlikely to result in any changes, as delegates have already said that they aren’t necessary.
  • The US said it destroyed 4 Houthi drones that were targeting a warship in the Red Sea.
  • EIA data showed a 3.17mn barrel crude inventory build despite a small drawdown being expected, which weighed on oil prices at the start of the APAC session. Gasoline stocks increased 1.3mn barrels after drawdowns over the past weeks, but distillate fell 1.19mn. Refinery utilisation rose 0.9pp to 88.7%.
  • Later final Q4 US GDP, jobless claims, March MNI Chicago PMI & Uni of Michigan consumer sentiment print.
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Oil prices are higher during APAC trading today after being little changed on Wednesday but they are off their intraday highs. Prices recovered after dipping on Governor Waller’s comments that the Fed should wait before easing. WTI is up 0.5% to $81.72/bbl after approaching $82, and Brent is 0.3% higher at $86.36 after reaching a high of $86.58. The USD index is unchanged.

  • Oil prices look likely to end March around $10/bbl higher than the end of 2023 or around 13% higher. March itself probably saw an increase just over 5% on the month. Prospective Fed easing, geopolitical tensions, improved demand prospects and OPEC supply cuts buoyed prices but there remains a lot of uncertainty around China’s consumption and OPEC members’ quota compliance. Sentiment is positive going into Q2 though.
  • OPEC has extended its 2mbd output cuts to end June and quotas will be reconsidered in June. Next week’s review meeting is unlikely to result in any changes, as delegates have already said that they aren’t necessary.
  • The US said it destroyed 4 Houthi drones that were targeting a warship in the Red Sea.
  • EIA data showed a 3.17mn barrel crude inventory build despite a small drawdown being expected, which weighed on oil prices at the start of the APAC session. Gasoline stocks increased 1.3mn barrels after drawdowns over the past weeks, but distillate fell 1.19mn. Refinery utilisation rose 0.9pp to 88.7%.
  • Later final Q4 US GDP, jobless claims, March MNI Chicago PMI & Uni of Michigan consumer sentiment print.