OIL: Crude Continues Recovery But Pessimistic IEA Report Could Change That

Oil prices have continued to climb during APAC trading today after rising over 2% on Wednesday buoyed by better risk sentiment and concerns over the impact of Hurricane Francine on the energy sector. Prices are currently little changed on the week despite Tuesday’s sharp sell off. 

• Brent is up 0.6% to $71.05/bbl after a high of $71.08, while WTI is 0.5% higher at $67.68/bbl, close to the peak of $67.72 but still down 8% this month.
• The IEA’s monthly report is published today and it tends to be less optimistic than OPEC on the crude outlook. Pessimistic demand projections may spook markets already nervous about a demand slowdown.
• EIA inventories rose 833k barrels last week, the first increase since mid-August, with gasoline up 2.31mn and distillate +2.31mn. Both gasoline and distillate demand were lower as the holiday season finished.
• Hurricane Francine made landfall in Louisiana today. 39% of Gulf of Mexico oil production has been shut because of the storm, according to US Bureau of Safety and Environment Enforcement. The question now is how long the outage will last. Also around eight land-based refineries may be impacted.
• Later US August PPI, budget and jobless claims print. Core PPI is expected to hold steady at 2.4% y/y. The ECB announces its decision today, which will be accompanied by updated staff forecasts and a press conference. It is expected to cut rates 25bp.