Crude Holds Onto Gains, But Supply/Demand Headwinds Persist

Oil has held onto Wednesday’s significant gains. It is currently up around 0.2% after rising 2.5% yesterday and now stands around 10% higher year-to-date. A Ukrainian drone attack on Russian energy infrastructure plus a decline in US crude inventories as refining utilisation rose buoyed the market. Brent crude is up 0.2% to $84.22/bbl, close to the intraday high, and WTI is +0.2% to $79.88, as it attempts to break $80. The USD index is slightly higher.

• EIA data showed a 1.54mn barrel crude drawdown in the US last week, the first in almost two months. Refinery utilisation rose almost 2pp to 86.8%, more than expected. Gasoline stocks fell 5.66mn signalling increased demand ahead of the driving season.
• Oil markets have reacted to Fed expectations and at times have sold off when easing expectations were pushed out. The focus is now on next week’s March 20 FOMC decision and the tone of the statement.
• The supply outlook also remains a focus with OPEC members struggling to stick to quotas and US output robust. The IEA’s monthly report including forecasts is published today.
• Later US jobless claims, February retail sales and PPI data print. Retail is expected to bounce back from January’s decline and headline PPI should rise in line with January but core could moderate. ECB’s Schnabel, Elderson and de Guindos speak.