Crude Lower Today But Market Generally More Positive

Oil prices are down during APAC trading today after rising around 2% on Wednesday on the back of a weaker dollar driven by the larger than expected drop in headline US inflation. WTI is currently 0.3% lower at $82.98/bbl and Brent is -0.4% to $87.00, both are around their intraday lows. The USD is close to flat so far today.

• Supply factors have also been supporting crude with OPEC announcing it will reduce output from May, flows from Iraqi Kurdistan still halted, signs that Russia is reducing production and lower US stocks at Cushing. Timespreads from futures contracts are also pointing to a tightening of the market. Moderating US inflation is boosting optimism that the Fed is close to a peak but core remains sticky. Analysts still expect another 25bp hike in May.
• China saw a sharp increase in energy imports in March to their highest since mid-2020. Also exports of refined products fell 12%, as fuel was kept for domestic use.
• The monthly OPEC report on market conditions is published today. On Wednesday, the IEA said that it expects demand to be stronger than supply in H2 2023.
• Later there is US PPI data for March, which is expected to post lower annual growth rates, and also jobless claims. There are no Fed speakers scheduled. There is euro area and UK February output data.