Oil prices trended down earlier in the APAC session because of continued demand worries, but have bounced off their intraday low to be higher on the day helped by the US crude stock drawdown and the USD index coming off its highs. WTI is up 0.7% to around $68.20/bbl after a low of $67.74 earlier. Brent is also 0.7% higher at $73.05 following a low of $72.57.

• In an unusual move, Brent traded at a discount of around 10c to Dubai earlier, due to concerns re OECD rate hikes and the impact it will have on oil demand, according to Bloomberg. This means that lower grade crude was trading at a premium. If Brent closes lower, then this is the first time this has happened since November 2020. The spread has been narrowing due to reductions in output from the Middle East, whereas large US crude shipments (lighter, sweeter oil) to Europe have weighed on Brent.
• There have also been huge opposing positions in Middle East crude taken by China’s largest oil company and refiner which have clouded the market.
• Bloomberg is reporting that the Brent-Dubai exchange of futures for swaps for August has narrowed to 4c/bbl from $2 at the start of June. It is an indicator of flows from west to east.
• Later EIA US inventory data prints. Fed’s Powell, ECB’s Lagarde, BoJ’s Ueda and BoE’s Bailey all speak at the ECB Sintra conference. US May trade and inventories are released as well as the Fed’s bank stress test report.