Crude Recovers As Market Assessed As Oversold

Oil prices recovered somewhat on Wednesday rising around 1.5% as markets stabilised given concerns over excess supply appear now to be priced in. The USD index was slightly lower.

• WTI rose 1.4% to $74.29/bbl and has started today’s trading higher at $74.42/bbl. It fell to $72.92 following the EIA inventory data but rallied from there as the market was assessed as oversold. The benchmark is still down 3.5% this week. Moving average studies are in a bear-mode position, highlighting the downtrend. Initial support is at $72.48 while resistance is at $76.15.
• Brent is up 1.5% to $78.66/bbl to be 3% lower this week. It rallied after falling to $77.21. Brent has fallen below a number of key support levels which has reinforced the bearish theme and opened up $75.63. Initial support is at $76.76 while resistance is $80.44.
• The EIA reported a US crude inventory build of 1.23mn barrels with gasoline up 2.1mn and distillate 3.2mn. Refinery utilisation rose 1.1pp to 95.4%, higher than expected but slightly below where it was the same time last year. Implied demand for gasoline and distillate were both lower.
• Oil exports from Venezuela rose 30% m/m to be up 7% y/y in May as shipments were rushed out before the reintroduction of US sanctions, according to IntelliNews.
• MNI believes that the soft demand outlook will make it difficult for OPEC+ to reduce its output cuts in October (see MNI Commodity Weekly). Saudi Aramco reduced its prices for oil shipped to Asia due to uncertain demand.