US ISM Miss Weighs, Steady In Early Friday Trade With Focus On Middle East

Oil paired back earlier gains from this week as US economic data showed clear headwinds around the the US economic outlook (particularly the weaker ISM print) were enough to offset concerns as to supply given rising Middle East Tensions.

• WTI fell to $76.24 post the data release, while Brent declined $79.43/bbl. WTI is relatively steady in early Friday dealings, last near $76.80/bbl.
• With US and Asian data softening and Middle East tensions rising, oil will have dual forces driving it’s outcome in the coming days.
• OPEC advised overnight that they do not intend to change output targets. OPEC had agreed to start increasing output to 2022 levels to stabilize prices. This is likely to add approximately 500,000 barrels a day to production over the fourth quarter.
• This should offset supply concerns should Middle East tensions worsen. Oil traders having taken a bullish view on oil given tensions in the Middle East with over 300,000 Brent Call options traded mid week.
• According to Bloomberg, call option activity was focused in the $87-$90 and the $110-$130 area as traders look to position ahead of any potential rally.