Oil futures: Brent hits 4-mth highs above $87.50/b before easing
Quantum Commodity Intelligence – Crude oil futures Wednesday were higher after holding the previous-session's late gains, in what so far has been a volatile week characterised by sharp price swings.
Oct23 ICE Brent futures were trading at $86.93/b (1755 GMT), compared to Tuesday's settle of $86.17/b, hitting fresh four-month highs with a peak of $87.65/b before easing back.
At the same time Sep23 NYMEX WTI was trading $83.73/b, versus Tuesday's close of $82.92/b.
Bearish economic data from China had weighed on sentiment across the commodities sector early in the week, exacerbated by a stronger USD, but oil staged a late recovery Tuesday after the US Energy Information Administration upped both price forecasts and GDP outlook.
"Oil prices initially tanked due to concerns over China's trade data and EU and US banking concerns. Still, prices rebounded when the EIA released a monthly report predicting a 1.9% increase in GDP growth in 2023, higher than their previous forecast of 1.5%," said Stephen Innes, managing partner SPI Asset Management.
The agency also sees Brent crude oil prices averaging $86/b in the 2H of 2023, up around $7b from the previous forecast.
Black Sea
Meanwhile, tensions in the Black Sea continue to simmer, as Ukrainian President Zelensky said his country would retaliate if Russia continued to block its ports.
"The Ukrainian drone attacks on Russian oil tankers in the Black Sea region have added to supply risks for the crude oil market," said Warren Patterson, head of ING's commodity research. "The Black Sea route accounts for 15-20% of the oil that Russia sells daily on global markets and is also a major transit corridor for Kazakh crude."
Markets initially brushed off data from the Energy Information Administration showing a 5.85-million-barrel build in US crude commercial stocks, which in part was offset by a 2.7-million-barrel drop in gasoline inventories.
Earlier crude also shrugged off data released late Tuesday by the American Petroleum Institute, which revealed a 4-million-barrel build in commercial crude oil stocks, coming on the back of the previous week's record 15.4-million-barrels draw.
On the downside, China's economic malaise, underlined by weak data for July, indicated that more monetary policy and fiscal stimulus are required, but so far, Beijing has been slow to act.
Chinese consumer prices fell 0.3% in July compared with a year earlier, as sluggish consumer demand and broader economic concerns tipped the world's second-largest economy into deflationary territory for the first time in two years.
