Prices Range Trading After Overnight Correction

Oil prices have been in a tight range today around the NY close of $77.94/bbl for WTI and $85.41 for Brent. Prices fell sharply overnight on continued Chinese demand concerns and discussions that the EU will implement a softer Russian oil price cap. WTI is now well below its 50-day MA.

• WTI has been trading between $77.30 and $78.00 today and Brent between $85 and $85.31.
• It looks like the EU will introduce an oil price cap on Russian shipments of $65-$70 rather than the originally proposed $40-$60. This would reduce the risks of severe retaliation from Russia. A higher cap is also likely to keep crude prices lower overall, given Russia’s influence it would allow more of its output onto the global market. Goldman Sachs doesn’t think that the cap at this level will be effective in hurting Russia and only the current oil embargo will impact its supply.
• The EIA reported a 3.69mn barrel drawdown in crude inventories in the US after -5.4mn last week. However, there was a much needed build in distillate and gasoline stocks of 1.72mn and 3.06mn respectively.
• The US is closed for Thanksgiving. But there is the German IFO in Europe and the ECB meeting accounts plus a number of ECB speakers.