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OIL: Markets Watching Geopolitics, Currently Not Too Troubled By China Equities

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Oil prices are moderately higher during APAC trading after Tuesday’s sharp sell off and despite the severe drop in China equities today. Geopolitical risks in the Middle East remain a concern for energy markets though. WTI is up 0.2% to $73.74/bbl off the intraday low of $73.53. It rose to $74.19 earlier in the session. Brent is 0.3% higher at $77.43/bbl after falling to $77.21. The USD index is slightly higher. 

  • Israel is yet to retaliate for Iran’s missile attack on October 1. A response was expected this week and US President Biden urged Israel to avoid Iran’s oil infrastructure, but the conflict has remained between Israel and Iran-backed Hezbollah and Hamas. Options remain skewed towards calls, according to Bloomberg.
  • Morgan Stanley has revised up its Brent forecast by $5 to $80/bbl due to current geopolitical issues, according to Bloomberg. It still expects an increasing surplus in 2025 as OPEC looks set to increase output from December.
  • Concerns over the strength of China’s economy persist though, especially following Tuesday’s disappointing NDRC press conference. It is the world’s largest crude importer.
  • Bloomberg reported an 11mn barrel crude stock build in the US last week, according to people familiar with the API data. Product inventories fell with gasoline down 557k barrels and distillate 2.6mn. The official EIA data is released later today.
  • Later the Fed’s Jefferson, Bostic, Logan, Goolsbee, Collins and Daly appear plus the September FOMC meeting minutes are published. There is little data with August US wholesale sales/inventories and German trade the highlights.
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Oil prices are moderately higher during APAC trading after Tuesday’s sharp sell off and despite the severe drop in China equities today. Geopolitical risks in the Middle East remain a concern for energy markets though. WTI is up 0.2% to $73.74/bbl off the intraday low of $73.53. It rose to $74.19 earlier in the session. Brent is 0.3% higher at $77.43/bbl after falling to $77.21. The USD index is slightly higher. 

  • Israel is yet to retaliate for Iran’s missile attack on October 1. A response was expected this week and US President Biden urged Israel to avoid Iran’s oil infrastructure, but the conflict has remained between Israel and Iran-backed Hezbollah and Hamas. Options remain skewed towards calls, according to Bloomberg.
  • Morgan Stanley has revised up its Brent forecast by $5 to $80/bbl due to current geopolitical issues, according to Bloomberg. It still expects an increasing surplus in 2025 as OPEC looks set to increase output from December.
  • Concerns over the strength of China’s economy persist though, especially following Tuesday’s disappointing NDRC press conference. It is the world’s largest crude importer.
  • Bloomberg reported an 11mn barrel crude stock build in the US last week, according to people familiar with the API data. Product inventories fell with gasoline down 557k barrels and distillate 2.6mn. The official EIA data is released later today.
  • Later the Fed’s Jefferson, Bostic, Logan, Goolsbee, Collins and Daly appear plus the September FOMC meeting minutes are published. There is little data with August US wholesale sales/inventories and German trade the highlights.