Crude Up Moderately Following Wednesday’s Sharp Fall

Oil prices are off Wednesday’s lows during APAC trading today. Continued geopolitical uncertainties with better risk sentiment have supported crude. WTI is up 0.7% to $76.38/bbl but off the intraday high of $76.50 and Brent is 0.7% higher at $81.08 after reaching a high of $81.20. A slightly lower US dollar has also provided some support.

• The US said that is shot down Iranian drones and a Houthi missile in the Gulf of Aden off Yemen’s coast. Threats to shipping in the area are yet to abate. Also, an expected US response to the killing of 3 soldiers is keeping markets alert. Iran has denied supplying the weapons and has warned against retaliating.
• Total US production rose 5.7% in the latest week, rebounding from weather-impacted closures. But strong US output over recent months has been one of the factors keeping a lid on oil prices.
• Bloomberg is reporting that the problems in the Red Sea are pushing European diesel prices higher due to the longer routes to avoid the area. Europe has found other sources of refined products since it banned Russian diesel following its invasion of Ukraine.
• Later there is US Q4 productivity/ULC, jobless claims, January manufacturing PMI/ISM as well as European PMIs and euro area January CPI. The Bank of England meets and is expected to leave rates unchanged. ECB’s Lagarde and Lane make appearances.