Crude Remains Lacklustre, Fed’s Powell Speaks Later

Oil prices fell sharply on Tuesday to levels not seen since August and there has been no recovery during the APAC session today with Brent down 0.1% and WTI -0.3%. Prices fell sharply early in the session with WTI falling to $76.51/bbl and Brent to $81.26 but they are now at $77.15 and $81.57 respectively. The USD index is flat.

• The lacklustre performance was driven by continued US and China demand concerns and signs of increased supply from Russia and rising US inventories. But OPEC+ retains its positive demand outlook. The next meeting will be held over November 25/26 and an announcement on Saudi/Russian output cuts could be made then.
• The US EIA has revised down its 2024 Brent forecast by 1.8% to $93.24/bbl due to an expected increase in supply but demand should also be stronger. But gasoline consumption per person is expected to fall in 2024 to a 20-year low due to higher prices and cost of living pressures.
• WTI’s prompt spread has narrowed to only 11c, signalling less market optimism, according to Bloomberg.
• Bloomberg reported that US crude inventories rose 11.9mn barrels in the latest week, according to people familiar with the API data. Gasoline stocks fell 400k but distillate rose 1mn. The official EIA data won’t be published today but two weeks will be released on November 15.
• Later the Fed Chairman Powell delivers some opening remarks, which given recent FOMC members’ comments are likely to be monitored closely. Also The Fed’s Cook, Williams, Barr and Jefferson speak. BoE Governor Bailey and ECB’s Lane and Enria also appear. ECB President Lagarde is attending the Eurogroup meeting. There is little on the data front.