Crude Holding Onto Gains But Outlook Soft

Oil prices have continued Wednesday’s rise during today’s APAC trading. Crude found a floor when the market appeared oversold. Better risk sentiment and a softer US dollar (USD index -0.1%) have also provided support. WTI is up 0.5% to $74.47/bbl, close to the intraday high of $74.59, while Brent is 0.4% higher at $78.71 after reaching $78.84.

• On Sunday OPEC announced that it would reduce its production cuts from October but it retains the flexibility to alter that plan depending on market developments. Saudi Aramco has cut prices for June shipments to Asia for the first time since February though, which is a sign that it is concerned about demand in the region.
• The EIA reported a US crude inventory build of 1.23mn barrels with gasoline up 2.1mn, highest in just over 2 months, and distillate 3.2mn. Refinery utilisation rose 1.1pp to 95.4%, higher than expected. Implied demand for gasoline and distillate were both lower.
• Later US jobless claims, May Challenger job cuts, April trade and final Q1 productivity/ULC as well as April German orders and euro area retail sales print. The ECB decision is announced and a 25bp cut is expected.