Crude Recovers Today But Only Partially

Oil has started February on the back foot. Prices fell sharply on Wednesday down 2.8% as US data showed a further inventory build. Crude has only partly unwound those losses during the APAC session rising around 0.8%. DXY is down 0.3%.

• WTI is trading just above $77/bbl close to the intraday high and off the low of $76.69 earlier, but below its 50-day MA. Brent is around $83.45 after a low today of $83.15, and above the 50-day MA. Brent remains above its support of $82.06.
• OPEC+ “reaffirmed their commitment” to current output quotas after their meeting on Wednesday. It is monitoring the impact of China’s reopening on demand.
• Goldman Sachs remains optimistic on oil prices and they continue to forecast Brent at $105/bbl in Q4 supported by a better global growth backdrop. In the short-term, oil should find support from cold weather. It currently has boosted crude demand by 200kbd in recent days.
• On February 5, the EU will ban almost all seaborne imports of Russian refined products and there is talk that the G7 plus EU will include a price cap on Russian fuel with $100/bbl being discussed for diesel. (bbg)
• Later the ECB and Bank of England meet and both central banks are expected to hike rates 50bp. In the US, Challenger job cuts for January, jobless claims and Q4 preliminary unit labour cost data are scheduled.