OIL: Crude Little Changed As Geopolitics Offset By Fundamentals & Stronger USD

Oil prices are off their intraday highs to be little changed during APAC trading as heightened geopolitical risks are offset by the Fed suggesting rate cuts aren’t imminent, which has driven the US dollar higher. WTI rose to $72.99/bbl and is now around $72.82. Brent increased to $78.21 and is now hovering around $78.00. The USD index is 0.1% lower.

• Any news that shows progress in ceasefire talks between Hamas and Israel is likely to weigh on oil prices given that non-OPEC supply is robust and OPEC members are producing above their quotas. There is also continued concern re the strength of demand from China, the world’s largest importer.
• Saudi kept is main crude price steady for March but it needs oil prices to average at least $90/bbl for it to balance its 2024 budget, according to Fitch. This increases the chance that its output cuts will be extended into Q2.
• US crude output and refining has been normalising since a cold snap caused some disruptions. Later API inventory data is released which should provide information on if that process is complete.
• Later the Fed’s Mester speaks on the economic outlook and Kashkari and Collins also make appearances. There is no US data of note but euro area December retail sales are released.