Prices Range Bound Again On Difficult Political Environment

Oil prices have been trading in a tight range. Even the short-lived bounce in reaction to reports of a Russian-made missile exploding in Poland didn’t break out. WTI has been between $87.50 and $86.35/bbl and is now at the lower end of the range on the back of USD gains. Brent traded between $93.40 and $94.10 and is now around $93.40. Prices are about 0.5%below the NY close.

• US API data showed that the previous week’s build in crude was more than unwound in the latest week with stocks falling 5.835mn bbl. Distillate stocks rose slightly by 0.9mn bbl and gasoline by 1.7mn.
• The IEA noted in its November report that crude inventories in developed countries were at their lowest since 2004, making them vulnerable to further supply disruptions. It also reported that OPEC+ output remains more than 1mbd below the quota.
• Tight supply conditions balancing uncertainty regarding the demand outlook continue to keep oil prices range bound. Deterioration in the situation in the Ukraine could increase supply fears and reopening in China could improve the demand outlook and thus push prices higher again.