Prices Continue To Dive Ahead Of Weekend’s OPEC Meeting

Oil prices fell over 2% again on Wednesday after falling more than 4% the day before. They have been spooked by disappointing China data especially the May PMIs. Negative risk appetite has also weighed on crude but it did rally somewhat following the strong JOLTS job openings data. The USD index finished up only 0.1% after Fed officials signalled a pause in June.

• WTI held above $69/bbl through the APAC session but fell sharply during Europe to reach an intraday low of $67.03, the softest since mid-March. It recovered to around $69.50 before trending down again to be 2.7% lower. It is currently trading around $67.70. Brent fell 2.1% and reached a low of $71.50. It is now about $72.60.
• WTI breached support at $69.02 and is now moving towards the next level of $66.46. Brent breached $73.20 and came close to support at $71.28.
• The dive in oil prices this week will not make for a happy OPEC meeting on the weekend. They will be looking at disappointing demand from China, while the group’s exports are declining. The Saudi energy minister warned short-sellers earlier this month. It is possible that OPEC+ makes a small symbolic quota reduction to send a signal to the market. Most analysts expect no change.
• Bloomberg is reporting that API data showed a US crude build of 5.2mn in the latest week, according to sources familiar with the data. Gasoline rose 1.89mn and distillate +1.85mn.