Crude Lower As Fed Easing Seems Delayed But Watching Geopolitics

Oil prices have trended lower throughout the APAC session as there were no new developments in either the Middle East or Russia on Tuesday while US crude stocks rose sharply and Fed cuts are likely to be delayed. The market remains wary though of anything in the geopolitical space. The USD index is down 0.1%.

• WTI is down 0.7% to $84.77/bbl, close to the intraday low of $84.71. Brent is 0.6% lower at $89.49 having breached $90 early in the session. It is just off its low of $89.44.
• The Middle East remains firmly within the market’s radar after Israel said it would respond to Iran’s drone/missile attack but when it feels the time is right. Iran replied that it would promptly retaliate.
• In the options market, calls are trading at their widest premium over puts since the Hamas attack on Israel in October and 3mn barrels have been bought betting that prices reach $250 by June, according to Bloomberg.
• Bloomberg reported that US crude stocks rose 4.09mn barrels last week, according to people familiar with the API data. But there were inventory drawdowns of refined products, gasoline -2.5mn and distillate -427k. The official EIA data is out later today.
• Later the Fed’s Mester speaks and the Beige Book is published. The ECB’s Lagarde, Schnabel and Cipollone and BoE’s Bailey appear. In terms of data, March UK CPI/PPI and euro area CPI are released.