Crude Stronger On Better China Data And Heightened Middle East Risks

Oil prices are higher today driven by increased uncertainty in the Middle East after the Jordan leg of US President Biden’s trip was cancelled due to an explosion at a Gaza hospital. Stronger domestic data in China also supported prices but they are now off the high reached directly after the data was released. The USD index is flat.

• Brent is currently 1.8% higher during APAC trading at $91.54/bbl. Earlier it broke through $92 briefly following China data, which showed apparent oil demand up 17% last month. WTI is up 2.1% to $88.45 and reached a high of $89.09.
• Uncertainties in the Middle East continue to cause jitters in energy markets. There are concerns that the conflict will spread particularly to Iran, who also controls the strategic Strait of Hormuz, at a time of tight supplies. On a more positive note, Venezuela’s government and opposition have agreed on terms for a fair election, which would result in an easing of oil sanctions.
• Bloomberg reported that US crude inventories fell a more-than-expected 4.38mn barrels after rising 12.9mn in the previous week according to API data. Later official EIA data print and a drawdown of just over 1mn barrels is expected.
• Later there are numerous Fed speakers including Waller, Williams, Bowman, Barkin, Harker and Cook plus the release of the Beige Book. In terms of data, there are US housing starts/permits and UK CPI. ECB’s Lagarde is also scheduled to speak.