OIL: Crude Continues To Fall With Little To Support Prices

Oil prices fell sharply on Tuesday and have continued to sell off during APAC today. WTI has been trading below $70 and is currently down 0.6% to $69.92/bbl, today’s low of $69.72 is only a touch above the 2024 trough in early January. Brent is down 0.5% to $73.38/bbl after a low of $73.14 – a new trough for 2024 and the lowest since mid-2023. The USD index is down 0.1%.

• Weak risk sentiment has weighed again on oil prices but so too have persistent concerns over excess supply if OPEC begins to gradually increase output from October. But if prices remain around these levels, then there will likely be pressure for the group to delay the unwinding of its output cuts. It has voiced flexibility around the plan.
• Libya’s central bank believes that an agreement can be reached soon that will allow the country’s oil output to resume to usual levels after a political dispute cut it sharply.
• Algorithmic selling has exacerbated the sharp move down in oil prices seen this month.
• With the market so focussed on supply/demand developments, the US industry inventory data out later today and the official EIA numbers on Thursday are likely to be watched closely. Recently they have been signalling robust US demand.
• Later the Fed’s Beige book is released and July JOLTS job openings, durable goods orders and trade balance print. The ECB’s Elderson speaks, European August services/composite PMIs are released and the BoC decision is announced. Friday’s US payrolls will be a focus for crude markets as they await Fed easing to support demand.