Crude Rises On Extended Output Cuts But Attention Remains On Demand

Oil prices have unwound Monday’s losses during APAC trading. WTI is up 0.6% to $70.24/bbl, close to the intraday high of $70.31. It has found support at $70 again and moves below have been brief. Brent is 0.6% higher at $75.10, also close to the high of $75.18. Moves below $74.80 weren’t sustained. The USD index is slightly lower.

• News that Saudi Arabia’s 1mbd output cut would be extended into August and possibly beyond has provided some support, although it was expected, but has been limited by the weaker US manufacturing data for June. Lower demand for goods also means lower demand for fuel to transport it.
• Russia also said that it would decrease exports and production by 500kbd in August but it is unclear if this is a new reduction in addition to what was announced in April and hasn’t been strictly adhered to anyway. Algeria is also planning moderate cuts.
• Near term futures prices remain below those of later-dated contracts, which is a bearish signal.
• The US is closed for the Independence Day holiday. There is German May trade data and Canadian June manufacturing PMI.