Crude Stronger As Demand From Refiners Rises

Oil prices were stronger on Monday on more favourable supply – demand fundamentals. Refiners are buying more crude as margins have increased and China’s are purchasing too following large amounts of travel over the holidays, which is being taken as a tentative sign of improving demand from the world’s largest crude importer. There have also been supply disruptions and tensions in the Middle East remain elevated. The USD index was down 0.1%.

• WTI moved sideways to slightly lower through Monday’s APAC session and European morning and then trended higher to be 1.5% higher at $77.58/bbl to be up 2.5% this month. It reached a high of $78.03, but couldn’t hold the move above $78. Initial resistance is at $79.09 and support at $75.25.
• Brent rose to a high of $83.07 during US trading but couldn’t hold the break above $83. It found support at $81 earlier. It is now 1.1% higher at $82.52/bbl to be 2.5% higher in February. Initial support is at $80.53 and resistance at $83.96.
• The US is looking to buy 3mn barrels of sour crude for the SPR to be delivered in August.
• Libya’s Wafa field which produces around 45kbd was closed on Sunday due to a dispute over pay but has resumed operations.
• On Saturday a US tanker was targeted but not struck by Houthi rebels in the Gulf of Aden. The US and UK hit 18 Houthi sites in Yemen the same day. Purchasers are looking to buy US crude to avoid the area.