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Prices Rise Above April High, Supply Risks Driving Market

OIL

Oil prices rose around 1.5% on Wednesday to continue the uptrend that started in late June on supply concerns. WTI broke above the April high. It is currently $84.23/bbl off the intraday high of $84.65. Brent finished at $87.41, close to the high of $87.65. The USD index finished flat as markets wait for the key US CPI data out later today.

  • $83 provided support to WTI during the NY session when it fell to $83.02 and then recovered. WTI is moving towards round-number resistance at $85 which is followed by $85.94, 23 August 2022 high. Resistance for Brent is $90.
  • Bloomberg is reporting that WTI and Brent timespreads have widened further in backwardation due to concerns US shale output will be hampered by hot weather and the inventories at Cushing being down five of the last six weeks. The physical premium for WTI has been steady over the week though.
  • Tensions in the Black Sea continue to worry the market. But the demand outlook also remains uncertain given soft imports from China and the EIA’s downward revision to US 2023 product consumption.
  • EIA US crude inventories rose 5.85mn barrels in the latest week after falling a huge 17.05mn. Gasoline fell 2.66mn and distillate -1.71mn. US crude output increased 400kbd and refinery utilisation rose 1.1pp.

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