Crude Moves Higher Watching Middle East & US Economy

Oil prices are off their intraday highs but are still about 0.7% higher during the APAC session after falling around 2% on Monday. Brent has traded above $90 and made a high of $90.60/bbl earlier after prices fell to $90.18. It is currently $90.44. WTI has spent much of the session above $86 rising to a high of $86.30 before falling to $85.82. It is now around $86.04. The USD index is 0.2% lower.

• Developments in the Middle East remain the main driver of oil markets but US economic news also remains important. This week the data focus is on US preliminary October PMIs and core consumption for September.
• Prices are currently in a holding pattern while the prospects of an Israeli ground offensive seem to be in doubt, especially while negotiations to release hostages continue. War risk has been priced into crude but some of that was taken out yesterday as the conflict hasn’t spread outside Israel/Gaza. Iran is the main risk to global oil shipments.
• API data on US crude/product inventories are published later. Last week saw a drawdown of over 4mn barrels.
• In the US, preliminary October PMIs, Philly Fed non-manufacturing and Richmond Fed indices are released. Also ECB President Lagarde speaks, UK labour market data and European preliminary PMIs are out.