Crude Rises Further On US Stock Drawdown & China Stimulus

Oil prices are moderately higher during APAC trading after rising around a percent on Wednesday on news of a large US crude inventory drawdown. The US data and China’s RRR cut plus possible stimulus have supported crude markets today. WTI is up 0.4% to around $75.40/bbl after a low of $75.16 earlier. Brent has traded above $80 and is 0.3% higher at $80.27. After range trading through January, oil has been trending higher for the last week. The USD index is flat.

• The EIA reported a 9.23 mn barrel stock drawdown, a lot more than expected, as freezing temperatures resulted in production cuts and difficulties in unloading imports. The weather also impacted refining with refinery utilisation down 7.1pp, and reduced driving resulting in a gasoline inventory build of 4.91mn but distillate fell 1.42mn. The data will be monitored closely to see if the large crude draw is unwound as production normalises.
• Geopolitics remains important to oil market dynamics with Houthi rebels continuing to attack Red Sea shipping and the US defending vessels and its own troops in the region. There are also risks to Russian infrastructure from Ukraine.
• Later US Q4 GDP is released and is expected to rise 2% q/q saar. There are also US jobless claims, December durable orders and home sales. The ECB decision is today followed by President Lagarde’s press conference (see MNI ECB preview here). The German Ifo survey also prints.