Prices Off Intraday Lows As Market Weighs Supply/Demand Balance

Oil prices trended down through the European morning and then recovered but still ended the day down. WTI fell to an intraday low of $70.13 before rallying to $72.33 and finished down a 1%. It is currently around $71.65. Brent fell 0.7% to around $76.12. The USD index is 0.1% higher.

• WTI support is at $70, the June 2 low, and it came close to breaking this on Tuesday. Brent’s is at $74.18, the June 2 low.
• The market continues to be concerned about demand but is also watching the demand/supply balance in H2 2023 given OPEC output cuts and IEA deficit forecasts. Quota compliance will also be monitored, especially after Russian output in May only fell to 9.66mbd from 9.67mbd after it promised a 500kbd reduction.
• On the demand front, China’s trade data will be watched closely today, especially crude imports.
• Saudi Arabia increased its prices for July following its 1mbd output cut announcement. As a result, some Asian refiners are looking to other exporters for cheaper crude, as they continue to face squeezed margins from softer demand, according to Bloomberg.
• Bloomberg is reporting that API US crude inventories fell 1.71mn barrels in the latest week after a 5.2mn build, according to people familiar with the data. Gasoline rose 2.42mn and distillate 4.5mn barrels.