Crude Off Highs As Soft Risk Appetite Weighs

Oil prices are holding onto most of yesterday’s gains with WTI down to $71.68/bbl but Brent down 0.4% to $76.38. Crude rose in early APAC trading but has fallen with weak risk appetite driving equity markets across the region lower (Hang Seng down 3.1%). Minutes showed that most FOMC members think rates will need to rise further. The USD index is 0.1% higher and off the day’s lows.

• WTI reached an intraday high of $72.06 earlier but hasn’t been able to sustain moves above $72. It is currently close to the low of $71.64. Brent’s high was $76.82 and it is now trading close to intraday lows. Friday’s June payroll data will be a key input into the Fed and thus oil outlook.
• EIA US inventories are released today. Last week they were their lowest for nearly 6 months. Bloomberg reported that US API crude stocks fell another 4.38mn barrels in the latest week after -2.41mn according to sources familiar with the data. Gasoline rose 1.6mn and distillate 600k.
• Later the Fed’s Logan speaks. Also in the US, there are jobless claims, Challenger job cuts, JOLTS job openings, ADP employment and services ISM/PMI – all of which will be important guides to Friday’s payroll data. There is also US May trade.