Crude Higher But Demand Outlook Dampening The Market

Oil prices are slightly higher today boosted by slightly-better-than expected China activity data, although the property sector remains weak. Brent is 0.3% higher at $82.69/bbl, but off the intraday high of $82.79. WTI is up 0.2% to $78.42 after a high of $78.54. The USD index is down 0.1%.

• The upside to oil prices from the expectations that the Fed is done following the lower US inflation data was limited by the IEA saying that the market in Q4 won’t be as tight as expected especially due to increased supply. This was less optimistic than the OPEC monthly report on Monday.
• CBA expects Brent to average $85/bbl in Q4 and then $75 by Q2 2024 with the moderation driven by weaker demand.
• Bloomberg reported that US crude stocks rose 1.335mn in the latest week, according to people familiar with the API data. 2 weeks of official EIA inventory data are published later today, which will be key to the supply outlook.
• China’s refined output is down 3% on the September record but volumes are still up about 9% y/y, according to Bloomberg. China is the largest global crude importer but refining margins have been squeezed. Oil demand also fell 2.4% in October due to a weak recovery in air passenger transport and stabilising inventories.
• Later the Fed’s Barr and Barkin speak plus there is US October retail sales, the control group is expected to rise 0.2% m/m, and PPI data. There are also UK CPI/PPI and euro area IP.