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Crude Holds Fade Despite Surprisingly Large Inventory Draw

COMMODITIES
  • Crude front month futures have eased back slightly today, ending a 9-day winning streak for WTI despite a larger than expected draw for US crude stocks in the EIA weekly petroleum summary (-6.31m vs -2.35m expected).
  • The near term crude option put skews have continued to reduce after Saudi Arabia and Russia extended output cuts until the end of the year. The WTI downside skew is the least bearish since February. Both the second month Brent and WTI 25 delta call-put skews are back up to -2.25% compared to lows of around -4.7% in late August.
  • JPMorgan analysts still don’t see oil prices breaching $100 in 2023, absent a major geopolitical event, due in large part to the demand outlook in 4Q despite the OPEC+ cut extension. Separately, RBC have Brent forecast to average 91$/bbl and WTI at $86.50/bbl in 4Q although $100/bbl could be within reach.
  • Saudi Arabia is set to increase crude supplies to China in 2024 to meet demand at new refineries, sources told Platts at the APPEC conference in Singapore.
  • WTI is -0.7% at $86.92, not testing support at $82.04 (20-day EMA) or resistance at $88.08 (yesterday high).
  • Brent is -0.7% at $89.95 also not testing support at $85.97 (20-day EMA) not resistance at $91.15 (Sep 5 high).
  • Gold is +0.2% at $1919.77 as the drag from a modestly stronger US dollar is offset by lower Treasury yields, holding above support at $1903.9 (Aug 25 low) whilst resistance remains at $1931.4 (50-day EMA).
Energy BulletsCommoditiesJPMorgan Market News
Energy BulletsCommoditiesJPMorgan Market News

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