Crude Holding Gains As Supply Cuts Expected To be Extended This Week

Oil prices have held onto their gains from recent sessions during APAC trading today. WTI is up 0.4% to $85.92/bbl, off its low of $85.65, but it has not been able to hold breaks above $86. Brent is down slightly hovering just under $89 which it hasn’t been able to breach clearly. Its intraday high was $89.11 and is currently at $88.93. The USD index is 0.2% higher.

• The supply outlook remains a key factor driving the market with Saudi Arabia and Russia expected to announce an extension of output cuts into October this week. Goldman Sachs has said that the reductions have resulted in a 2.3mbd shortfall in Q3. The US has also seen large crude inventory drawdowns and later today the API will release its latest stock data, which is likely to be monitored closely given last week’s huge 11.5mn drawdown.
• The gap between the two nearest contracts for Brent, the prompt spread, has widened this week to 75c/bbl up from 58c/bbl a week ago, according to Bloomberg.
• Later there are European/US services and composite PMIs for August as well as US July factory orders and final July durable goods orders.