Crude Range Trading But Remains Elevated

Oil prices have held onto Tuesday’s gains and have been in a narrow range during APAC trading. WTI is unchanged at $86.70/bbl. It found round-number resistance at $87 where it reached the intraday high. Brent is also steady at $90.06 and has traded above $90 during the session with the low at $90.02. It made a high of $90.34 earlier. The USD index is off its intraday high but close to Tuesday’s close.

• On Tuesday Saudi Arabia and Russia announced their output cuts of 1mbd and 300kbd respectively would be extended to the end of the year whereas the market expected only until October. Prices rose sharply on the news. The WTI prompt spread is at its widest since mid-last year.
• OPEC+ output cuts plus stronger oil demand have resulted in prices rising around 20% in Q3 to date. The IEA estimates that consumption is at a record. Prices are likely to remain supported as these trends are expected to continue over the rest of 2023. Goldman Sachs sees upside risks to its crude forecasts, according to Bloomberg.
• Also on the supply side, the US has seen large crude inventory drawdowns and later today the API will release its latest stock data, which is likely to be monitored closely given last week’s huge 11.5mn drawdown.
• Later the Fed’s Collins speaks on the economy and policy making and Logan takes part in a listening session. The Beige Book is also published. In terms of data, the US July trade balance and August services PMI/ISM are out as well as euro area July retail sales. The Bank of Canada also meets.