OIL: Bearish Sentiment Weighs on Crude Ahead of OPEC & US Fed

Crude prices remain under pressure after a decline yesterday taking Brent front month below $80/bbl for the first time since early June. Bearish sentiment is driven by weak China demand, a stronger US dollar and current OPEC plans for more supply from Oct. 

• Progress toward a Gaza ceasefire is adding to the downside pressure although with heightened risk of an escalation in the conflict between Israel and Hezbollah.
• Citigroup revised China’s GDP growth forecasts down to 4.8% while activity softened further in July and as a result H2 imports are also likely to be soft, according to Bloomberg.
• The next OPEC JMMC meeting takes place on Aug 1 with market participants divided over whether there will be changes to production targets amid recent bearish sentiment.
• The nine-day relative strength index is signalling that both benchmarks are now oversold, according to Bloomberg.
• US oil inventories will again be in focus with API data due today ahead of EIA data tomorrow after last week showing the fourth consecutive weekly drop in US crude inventories to the lowest since February. The Fed decision on Wednesday and payrolls on Friday will also be key to the outlook.
• Diesel crack spreads have eroded most of last week’s gains amid tepid summer demand, ample supply, and weaker Eurozone manufacturing.
  • Brent SEP 24 down 0.4% at 79.46$/bbl
  • WTI SEP 24 down 0.5% at 75.44$/bbl
  • Brent SEP 24-OCT 24 up 0.04$/bbl at 0.77$/bbl
  • Brent DEC 24-DEC 25 down 0.15$/bbl at 3.18$/bbl
  • US gasoline crack up 0.2$/bbl at 23.87$/bbl
  • US ULSD crack down 0.1$/bbl at 24.63$/bbl