Prices Rise Further In Better Risk Environment

Oil prices have moved higher during the APAC session on the improved risk environment. After rising 4% on Friday, crude is 0.5-0.6% higher today with WTI at $71.75/bbl and Brent $75.68. The USD index is 0.15% weaker.

• Brent fell through $75 briefly today but then bounced off its intraday low of $74.95. WTI held above $71 reaching a low of $71.04.
• The oil market remains nervous about the growth outlook despite the recent rally. It is likely to continue reacting strongly to any developments implying soft activity, especially given thin liquidity. Bloomberg is reporting though that physical demand indicators are suggesting that recent downward price action was excessive.
• The expectations in this week’s OPEC and US EIA monthly oil market reports could be market movers given the current degree of market sensitivity. They are published on Thursday and Tuesday respectively. Saudi Aramco, the largest global producer, releases results this week too.
• Goldman Sachs is expecting large oil market deficits in H2 2023 which it expects will support higher prices. It believes that the recent price moves were mostly driven by a “macro-financial selloff”.
• Later today the Fed releases the Q1 loan officer survey and the May 2023 financial stability report. Also, Fed’s Kashkari is moderating a panel discussion on minimum wages. The key piece of US data this week is Wednesday’s April CPI plus