Crude Lower Following OPEC Demand Revision, IEA Report Out Later Today

Oil prices are lower during APAC trading today after rising sharply yesterday on worries of a further escalation of issues in the Middle East. Markets have been driven lower by OPEC’s downward revision to its demand forecasts in its report published on Monday. The IEA’s is out later today as well as US inventory data. The USD index is down slightly.

• Benchmarks are off their intraday lows but are still down today. WTI is 0.6% lower at $79.61/bbl after a trough of $79.31. It rose 3.7% on Monday. Brent is down 0.6% to $81.80/bbl following a low of $81.50.
• OPEC’s monthly report showed a reduction in 2024 demand growth expectations by 135kbd, but the increase is still well above the IEA’s, whose report is out today. The adjustment was due to actual outcomes and softer expectations for China, the world’s largest crude importer. The group is due to reduce its output cuts from October.
• A strike from Iran or Hezbollah on Israel is expected soon. Israel’s IDF has been put on “peak alert”, according to the WSJ, and the US is increasing its presence in the region. Jordan and Saudi Arabia have refused to allow Iran to use their air space for an attack. US Secretary of State Blinken is scheduled to travel to the region later today, according to Axios. Gaza ceasefire talks are on Thursday. Another vessel was attacked in the Red Sea today.
• EIA US crude inventories have recorded six consecutive drawdowns but some refiners have announced a reduction in output. Industry data is released today with the EIA’s on Wednesday and both are likely to be monitored closely.
• Later the Fed’s Bostic speaks on the economy and US July PPI and small business confidence print. There’s also UK labour market data and euro area August ZEW.