Prices Recover Somewhat After Data Show US Crude Drawdown, US CPI Later

Oil prices fell on Tuesday but are higher today after industry data showed another US crude inventory drawdown. Risk sentiment is also supportive while the USD is little changed. Brent is up 0.5% to $81.11/bbl following a low of $80.89 but off the high of $81.40. WTI is 0.6% higher at $78.81 after rising to $79.10 and then falling to $78.62.

• Despite downward risks to prices from OPEC reducing its output cuts from October while also revising down its demand outlook, both Citigroup and Goldman Sachs believe that Brent could rise to the mid-$80s, according to Bloomberg.
• Bloomberg reported another large US crude stock drawdown of 5.2mn barrels last week, according to people familiar with the API data. Gasoline fell 3.69mn but distillate rose 612k. The official EIA data is out later today and if it is in line with API, it will be the seventh consecutive weekly decline.
• As well as demand/supply fundamentals, geopolitical uncertainty remains at the fore with an attack by Iran or Hezbollah on Israel expected and Ukraine’s continued incursion into Russian territory.
• Later the focus will be on US July CPI which is forecast to remain at 3% y/y but for core to ease 0.1pp to 3.2% (see MNI CPI Preview). UK July CPI/PPI, euro area Q2 employment/GDP and June IP are also released.