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OIL: Crude Moderately Higher, Waiting For US CPI Data

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Crude is off its Tuesday lows but has barely begun to unwind the sharp decline which was driven by downward revisions to OPEC’s global demand growth forecasts and soft China imports. WTI is up 0.5% to $66.10/bbl after a low of $65.91 followed by a high of $66.41. Brent is 0.5% higher at $69.54 reaching $69.82 earlier after a low of $69.31. The weaker US dollar is providing support with the BBDXY down 0.2%.

  • If the 14% drop in oil prices since the start of August is sustained, headline disinflation could pick up in the months ahead and with growth softening may feed through into core from second round effects, which would be good news for central banks but also for consumers. But the US’ EIA expects Brent to return to above $80/bbl in Q4 and average around $84/bbl in 2025.
  • The narrowing of the Brent prompt spread is signalling an easing market, but Tuesday’s sharp fall has meant that the relative strength index is flashing oversold, according to Bloomberg.
  • Hurricane Francine is due to make landfall today in Louisiana and may impact eight refining facilities along the coast which would reduce crude demand. But on the other hand some platforms in the Gulf have evacuated staff and stopped production. Officials said that about 25% of the Gulf’s crude output has been shut in.
  • Bloomberg reported that US crude inventories fell 2.79mn barrels last week, according to people familiar with the API data. Gasoline fell 513k while distillate rose 191k. The official EIA data is out today.
  • Later the focus will be on US August CPI, which is expected to show headline easing to 2.5% y/y with core stable at 3.2%. There are also US August real earnings and UK July trade/IP/GDP. The ECB’s McCaul and Buch speak too.
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Crude is off its Tuesday lows but has barely begun to unwind the sharp decline which was driven by downward revisions to OPEC’s global demand growth forecasts and soft China imports. WTI is up 0.5% to $66.10/bbl after a low of $65.91 followed by a high of $66.41. Brent is 0.5% higher at $69.54 reaching $69.82 earlier after a low of $69.31. The weaker US dollar is providing support with the BBDXY down 0.2%.

  • If the 14% drop in oil prices since the start of August is sustained, headline disinflation could pick up in the months ahead and with growth softening may feed through into core from second round effects, which would be good news for central banks but also for consumers. But the US’ EIA expects Brent to return to above $80/bbl in Q4 and average around $84/bbl in 2025.
  • The narrowing of the Brent prompt spread is signalling an easing market, but Tuesday’s sharp fall has meant that the relative strength index is flashing oversold, according to Bloomberg.
  • Hurricane Francine is due to make landfall today in Louisiana and may impact eight refining facilities along the coast which would reduce crude demand. But on the other hand some platforms in the Gulf have evacuated staff and stopped production. Officials said that about 25% of the Gulf’s crude output has been shut in.
  • Bloomberg reported that US crude inventories fell 2.79mn barrels last week, according to people familiar with the API data. Gasoline fell 513k while distillate rose 191k. The official EIA data is out today.
  • Later the focus will be on US August CPI, which is expected to show headline easing to 2.5% y/y with core stable at 3.2%. There are also US August real earnings and UK July trade/IP/GDP. The ECB’s McCaul and Buch speak too.