Crude Stabilises On US Inventory Drawdown & Lower USD

Oil prices are off their lows earlier in the session to be moderately higher as the risk tone has improved, the dollar is slightly weaker (USD index -0.1%) and API crude inventories fell. Brent is up 0.2% to $84.16/bbl after trading below $84 earlier in the session. It is just off its high of $84.26. WTI is approaching $80 rising 0.2% to $79.83, close to the intraday high of $79.91.

• Crude is down around a percent this week as demand concerns, especially from China, have outweighed supply tightening. The market is also jittery about the chance of further US rate hikes which Friday’s Jackson Hole speech by Fed Chairman Powell may shed light on. But the market is still projected to be in deficit in H2 2023.
• Bloomberg reported that API data showed US crude inventories fell a further 2.4mn barrels in the latest week, according to people familiar with the data. This has helped to stabilise oil prices. The official EIA data is out later which fell 5.96mn barrels in the latest data.
• Later there are preliminary US and European PMIs for August. There are no Fed speakers.