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OIL: Oil Higher On Softer Supply Expectations & Colder Weather

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Oil prices have continued to rise during APAC trading today, but are off their intraday highs, driven by a large reported US inventory drawdown and a cold snap in Europe & the US (heating oil is a distillate). Brent is up 0.4% to $77.32/bbl after reaching $77.47, while WTI is up 0.5% to $74.60/bbl following a high of $74.78. The USD index is up 0.1%.

  • There are increasing signs that sanctions are reducing consumption of Iranian and Russian crude with Middle Eastern producers increasing prices to Asia in the face of higher demand, reduced Russian exports and China’s eastern ports requested not to allow US-sanctioned vessels to dock. A tightening of sanctions against Iran by the new US administration is also expected. If the trend persists, then the forecasted excess supply in 2025 may narrow dependent on non-OPEC output and whether OPEC begins to normalise its own production.
  • Bloomberg reported that there was a US crude stock drawdown of 4.0mn barrels, more than expected, according to people familiar with the API data. Product inventories continued to rise though with gasoline up 7.3mn and distillate +3.2mn. The official EIA data is published later today.
  • Later the Fed’s Waller speaks on the economic outlook and the December FOMC minutes are published. US jobless claims, December ADP employment and November consumer credit as well as November German orders & retail sales and December euro area European Commission survey print.

 

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Oil prices have continued to rise during APAC trading today, but are off their intraday highs, driven by a large reported US inventory drawdown and a cold snap in Europe & the US (heating oil is a distillate). Brent is up 0.4% to $77.32/bbl after reaching $77.47, while WTI is up 0.5% to $74.60/bbl following a high of $74.78. The USD index is up 0.1%.

  • There are increasing signs that sanctions are reducing consumption of Iranian and Russian crude with Middle Eastern producers increasing prices to Asia in the face of higher demand, reduced Russian exports and China’s eastern ports requested not to allow US-sanctioned vessels to dock. A tightening of sanctions against Iran by the new US administration is also expected. If the trend persists, then the forecasted excess supply in 2025 may narrow dependent on non-OPEC output and whether OPEC begins to normalise its own production.
  • Bloomberg reported that there was a US crude stock drawdown of 4.0mn barrels, more than expected, according to people familiar with the API data. Product inventories continued to rise though with gasoline up 7.3mn and distillate +3.2mn. The official EIA data is published later today.
  • Later the Fed’s Waller speaks on the economic outlook and the December FOMC minutes are published. US jobless claims, December ADP employment and November consumer credit as well as November German orders & retail sales and December euro area European Commission survey print.