crude oil inventories

So Monday has been a silent prologue to the week which is packed with loads of releases from around the world. In the following days the EU Retail Sales, US Crude Oil Inventories And Initial Job Claims Go Public. What’s highlighted among mentioned? Chinese Manufacturing PMI, the US Nonfarm Payrolls and Unemployment Rate. Tuesday At 1:30 a.m. Retail Sales (MoM) indicator is released. The previous value hit 1.8%. In the afternoon we should follow the US releases so the CB Consumer Confidence and JOLTs Job Openings published at 3 p.m. Wednesday The day ‘begins’ quite late as ADP Nonfarm Employment Change is released at 1:15 p.m. This indicator previously amounted to 475K. Fifteen minutes later it’s time for two indicators: GDP (prev. 7%) and highly awaited Crude Oil Inventories releases which takes place at 3:30 p.m. Thursday Don’t fall asleep or wake up early on Thursday! At night (2:30 a.m. Chinese Manufacturing PMI goes public). At 7 a.m. British GDP is released followed by German Unemployment Change release almost two hours later. At 1:30 there are two indicators published – the US Initial Jobless Claims (187K) and Canadian GDP (0%) Friday The last working day of the week seems so be a long day. There are nine major releases planned beginning with Japanese Tankan Large Manufacturers and Non-Manufacturers Indices (Q1) presented at 0:50 a.m. Quarter to 3 a.m. it’s time for the release of Caixin Manufacturing PMI. We can have a nap afterwards as the next important announcement takes place at 8:55 a.m. Half past nine British Manufacturing PMI (55.5) is released followed by the EU CPI (YoY) (5.9%) half an hour later. At 1:30 p.m. in the US two indicators are released – Nonfarm Payrolls and Unemployment Rate. The week ends with ISM Manufacturing PMI released at 3 p.m. Data/Source: Investing.com Economic Calendar Time: GMT+1

Equities 2022-04-25 07:00 8 minutes to read Summary:  Global equity markets continued to adjust downward amid of a hawkish U.S. Federal Reserve and the rising likelihood of a much weaker Chinese economy in Q2 as a result of the punitive Covid-related lockdowns. Commodities were down as investors shifted their attention from supply disruption to potentially weaker demand. What’s happening in markets? Asian equities weighed by Friday’s US session and China lockdown.  US indices were down over 2% on Friday as risk off gripped markets that digested Fed’s hawkish tilt. S&P500 (US500.I) was down 2.8% while the tech-heavy NASDAQ 100 (USNAS100.I) was down 2.5%, likely to test March lows. Asian equities will get a beating as well, with Japan’s Nikkei (NI225.I) down 1.6% in the morning and Singapore’s STI Index (ES3) in loss of 0.7%. Tech stocks, as well as energy and steel miners were on the backfoot. Read next: By Saxo Bank: COT: Spec buying pauses on China and growth concerns| FXMAG.COM Chinese equities made new lows.   China’s CSI300 Index (000300.I) and Shanghai Stock exchange Composite Index fell below their March 16 intraday lows and closed the morning session down over 4%.  Northbound investment registered a net outflow over RMB4 billion. China Merchants Bank (600036/03968) fell 6.4% in Shanghai and 9.5% in Hong Kong trading following news late last Friday that the bank’s former CEO being investigated by the Chinese authority.  The overall markets in the mainland and Hong Know were pressured by rising worries about the Chinese economy heading for a sharp deceleration in growth in Q2.  Mining and energy stocks were sold off. Hang Seng Index (HSI.I) and Hang Seng TECH Index were both down more than 2%. Crude oil (OILUKJUN22 & OILUSMAY22)  was also down over 2% in Asia amid fresh demand concerns from China with record deaths reported in Shanghai and hints of a spread in Beijing. WTI dropped below $100 and Brent was below $104. Asian energy stocks like Inpex (1605) and Eneos (5020) in Japan or Chinese oil stocks will be on watch. Australia has a public holiday today. Read next: Saxo Market Call: Podcast: China's FX moves supercharging developments| FXMAG.COM Iron ore (SCOA) is having a meltdown.  Iron ore futures were down close to 12% in Singapore to 2-month lows. Rich valuations are coming to haunt, after steel output dropped over 10% in Q1. But key miners Rio Tinto (XXRIO), BHP (BHP) and Vale (VALE) have confirmed their guidance for full-year production. Fortescue Metals (FMG) will be reporting output data on Thursday. Miners and steelmakers will be impacted by this big move in iron ore in the Asian session, so Japan's Nippon Steel (5401) or Kobe Steel (5406) was key to watch. No great news on the state of the UK consumer.  Retail sales are down again in March (minus 1.4% month-over-month). They are still 2.2% above their pre-pandemic level. But the trend is really not looking good. In addition, UK GfK consumer confidence plunged in April more than expected, at minus 38 versus expected minus 33 and previous minus 31. Confiance is only slightly above all-time lows. This is hard to see how the UK economy could avoid at least a modest downturn in the coming months. We believe a 50-basis point interest hike by the Bank of England is now off the table in May. It would have negative ripple effects on the overall economy. Rather good eurozone PMI indicators in April.  The flash PMI data pointed to a pickup in the eurozone growth in April (55.8 versus prior 54.9). This was mostly driven by the service sector. The manufacturing sector fell to a 22-month low mostly due to record inflationary pressures. In Germany, supply issues seriously intensified, pushing the manufacturing sector into a downturn. Finally, the French composite PMI skyrocketed to 57.5 versus 56.3 in March. Both the services and the manufacturing sector experienced strong growth, at 58.8 and 55.4, respectively. Read next: COVID Strikes China Again, Weak Chinese Renminbi (CNY), Accelerating US Dollar (USD)| FXMAG.COM What to consider? Macron’s victory prompted only short-term gains in EUR.  The result of the French elections have taken a key risk off the table. President Emmanuel Macron is projected to win a second term in office after facing his far-right rival Marine Le Pen in a runoff election on Sunday. EURUSD popped up to 1.085 at the open in Asia but the rally was fully reversed. ECB President Christine Lagarde gave an interview over the weekend, saying that inflation is a “different beast” between the US and Europe. With Eurozone inflation mainly energy-driven and the labor market not as hot as the US, it is hard to imagine gains in EUR sustaining against the USD. Heavy U.S. Q1 earnings calendar this week.  With Amazon, Microsoft, Alphabet, Meta, and Apple reporting this week, analysts may have a better about whether margins for mega cap companies in the technology and consumer space can maintain their margins in the new inflation environment. You can refer to Peter Garnry’s note for a more detailed preview. China’s container throughput declined.   According to data from the China Port Association, foreign trade related container throughput fell 4.9% over the period between April 11 and 20, from the same period last year.  It was another sign of weakening exports in April and shed a shadow over China’s GDP growth in Q2.  Secretary Yellen’s favorable comments on China did not cause much excitement.   U.S. Treasury Secretary, Janet Yellen told Bloomberg that the Biden administration was re-examining its trade strategy with respect to China and considering the benefit of scaling back the Trump-era tariffs on Chinese goods to the reduction in U.S. inflation.  She also remarked that she did not think China was undermining the sanctions on Russia.  Read next: Russia-Ukraine War Is Still There. Check The "Equity Basket" Of Saxo Bank's Experts, Which Is Linked With The Circumstances In Europe| FXMAG.COM AUD making new lows in Asia.  Increasing risk off and a decline in iron ore prices is pushing AUDUSD lower to sub-0.7200 levels in Asia. NZDUSD also touched 0.6600 levels but AUDNZD slid below 1.0880. Australia’s Q1 CPI due on Wednesday. Indonesia’s palm oil ban to aid inflation fears.  Indonesia has announced plans to ban all exports of palm oil, which is a key ingredient of cooking oil, packaged food products, cosmetic, and other household items. Indonesia exports almost half of the global palm oil supply, suggesting further risks to Asia and global inflation outlook. Trading ideas to consider Brace for a busy earnings week.  Q1 earnings season shift gear with 558 major earnings releases that will impact sentiment in equity market. It is the big test of companies’ ability to pass on costs to their customers. Focus is on the biggest names such as Microsoft, Alphabet, UPS, Meta, Qualcomm, Boeing, PayPal, Apple, Amazon, Mastercard, Intel, Caterpillar, Exxon Mobil, and Chevron. Markets are in a cautious mode right now, any misses in the key megacaps earnings may mean a further run down to test key levels.  Analysts will examine the results closely to find out if the mega cap companies in the technology and consumer space can maintain their profit margins in the new inflation environment. Interested readers please refer to Peter Garnry’s note for a more detailed preview. Shorting CNHJPY.  The renminbi started its abrupt move to depreciate since April 19 when traders, in particular those in Europe, returned from a holiday, troubled by the underwhelming stimulus actions from the Chinese authorities, persistent lockdowns and deteriorating growth outlook for the Chinese economy.  The move was probably also driven by the misalignment of valuation of renminbi and other Asian currencies, in particular the Japanese Yen, which accounts for 10.8% of the renminbi’s reference basket.  Over the past several session, renminbi’s depreciated more against the Yen which was benefitted from lower commodities prices which in turn was a result of weaker China growth.  We suspect this realignment have more to go.  Interested readers can refer to our note on the renminbi last Friday. Further reopening moves from Singapore and Hong Kong.  Singapore announced further relaxation in Covid restrictions, scrapping predeparture tests for vaccinated travellers and allowing 100% of the workforce back into the office. Hong Kong also started to relax restrictions, opening restaurants for dinner after over two months and allowing non-residents from next months for the first time since 2020. Reopening gains, especially in Singapore are likely to stretch beyond airlines and airport operator to casinos and restaurants, as well as event organizers and mall and office-based REITs. Key economic releases this week: Wed, Apr 27: Australia Q1 inflation Thu, Apr 28: Japan retail sales, Bank of Japan meeting Fri, Apr 29: Eurozone April inflation rate flash, US March PCE index Key earnings to watch: Mon, Apr 25: Activision-Blizzard (ATVI), Coca-Cola (KO) Tue, Apr 26: Warner Bros. Discovery (WBD), UPS (UPS), PepsiCo (PEP), General Electric (GE), Alphabet (GOOG, GOOGL), Microsoft (MSFT), General Motors (GM) Wed, Apr 27: T-Mobile US (TMUS), Boeing (BA), Kraft Heinz (KHC), Ford Motor (F), Meta Platforms (FB), Qualcomm (QCOM) Thu, Apr 28: Caterpillar (CAT), Twitter (TWTR), Comcast (CMCSA), Merck (MRK), Amazon (AMZN), Apple (AAPL), Intel (INTC), PayPal (PYPL) Fri, Apr 29: Exxon Mobil (XOM), Chevron (CVX), Colgate-Palmolive Company (CL)   For a global look at markets – tune into our Podcast. 

Summary: On Friday the price of gold neared its one month high. Crude oil prices have jumped up and down over the past week. Supply may increase to meet demand. Read next: Wheat Prices Enter June On A Four Week Low Platinum Prices Rising Again, RBOB Gasoline Prices Reach New High  Gold prices rise again On Friday the price of gold neared its one month high. The price of gold has been elevated by the weakness of the US Dollar, putting gold on track for its third weekly gain. The dollar weakened overnight in the wake of data that showed US payroll rose less than expected in May. Therefore, U.S Dollar backed gold became more attractive to overseas buyers. The current geopolitical tensions and the chances of the global economy falling into a recession also increased demand for the safe-haven asset. XAUUSD Price Chart WTI Crude Oil prices. Crude oil prices have jumped up and down over the past week. The price has dropped slightly during trading on Friday in the wake of news that Saudi Arabia will increase its oil output. Saudi Arabia indicated to its allies in the West that it would increase its oil output to try to balance the fall the region is experiencing from its Russian oil embargo. WTI Crude Oil Price Chart Soybeans The price of soybeans have been volatile over the past two days. Late April saw Soybean prices hit record high prices amidst supply and demand concerns. A top palm oil producer based in Indonesia indicated that it would reinstate a requirement to allocate a certain amount to the domestic market as it lifts the most recent export embargo. However supply may increase to meet demand, however it will be tight. Soybeans Price Chart Read next: EU Reaches An Agreement On The Banning Of Russian Crude Oil, Coffee Prices Rise, Palladium Prices Decline Along With Supply Concerns  Sources: finance.yahoo.com, fxmag.com, tradingeconomics.com

The Commodities Feed: Oil dips following hawkish comments from Fed Chair Powell The oil market has been unable to escape the pressure from a more hawkish Federal Reserve. And this is despite a supportive inventory report from the Energy Information Administration (EIA)   Energy – Fed talk pressures the energy complex The oil market buckled yesterday as a result of further hawkish comments from Federal Reserve Chair Jerome Powell during his second day of congressional testimony. ICE Brent fell almost 3.9% on the day towards US$74/bbl. And this weakness has continued this morning. A more hawkish Fed overshadowed what was a fairly constructive EIA report. US commercial crude oil inventories fell by 3.38MMbbls over the last week, more than the 1.2MMbbls draw the American Petroleum Institute (API) reported the previous day and more than the market was expecting. Crude oil exports played a part in this draw, rising by 1.27MMbbls/d WoW to 4.54MMbbls/d. On the product side, small builds of 479Mbbls and 434Mbbls were seen in gasoline and distillate fuel oil respectively. In addition, implied US oil demand (total product supplied) hit 20.93MMbbls/d over the week – the highest number seen since December. Middle distillates remain well supported with the prompt ICE gasoil crack remaining above US$20/bbl, whilst the prompt time spread remains in deep backwardation. The latest data from Insights Global show that gasoil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) region continue to decline with them now standing at 2.04mt, which is below the five-year average and levels not seen since the start of the year. Refinery outages appear to be driving this tightness, which should continue to support middle distillates at least in the short term. There is very little on the calendar today for energy markets. Baker Hughes will release rig count data and if it continues to follow the trend seen so far this year, we can expect a further decline in drilling activity. Higher costs have likely contributed to slower drilling activity. The latest Dallas Fed Energy Survey shows that 60% of producers see drilling and completion costs per well to end this year higher than where they ended 2022. Today's other regular release on the calendar is the latest positioning data from the Commodity Futures Trading Commission (CFTC) and ICE. Given the move in the oil market over the last reporting week and the increase in open interest, we could see the net speculative long in ICE Brent having grown over the week. This is even more the case for ICE gasoil, where open interest has increased from a little under 706k lots to more than 720k lots over the reporting week.  

The Commodities Feed: Higher prices help oil supply The Energy Information Administration (EIA) has revised its oil production estimates for 2023 and 2024 higher as stronger oil prices improve the profitability of oil exploration.   Energy – EIA revise higher oil production In its latest short-term energy outlook report, the EIA revised up domestic oil production estimates as higher oil prices should help domestic producers push up spending and production plans. The administration estimates that US oil production will increase to an average of 12.8MMbbls/d for 2023 compared to its earlier estimates of 12.6MMbbls/d and output of 11.9MMbbls/d in 2022. For 2024, production estimates are revised higher to 13.1MMbbls/d compared to earlier estimates of 12.9MMbbls/d. Meanwhile, US demand for crude oil is revised higher from 20.44MMbbls/d to 20.47MMbbls/d in 2023, compared to 20.28MMbbls/d of consumption in 2022. However, for 2024, the consumption estimates were revised down to 20.75MMbbls/d compared to earlier estimates of 20.79MMbbls/d. Meanwhile, the American Petroleum Institute (API) reported that the US crude oil inventories increased by 4.1MMbbls over the last week, in contrast to market expectations of a drawdown of around 0.2MMbbls. However, Cushing crude oil stocks are reported to have decreased by 0.1MMbbls. On the products side, API reported that gasoline and distillates inventories fell by 0.4MMbbls and 2.1MMbbls respectively, over the week ending 4 August. The more widely followed EIA report will be released later today. China could increase crude oil processing at domestic refineries in August as some of the plants complete maintenance and ramp up output. According to OilChem, operating rates at state refineries could increase to 81.25% in August compared to around 80% in July.

Broader market concerns have weighed on the complex, whilst a stronger dollar has only provided further headwinds. However, for oil at least, the fundamentals remain constructive   Energy: Large US crude draws The oil market continues to come under pressure, with Brent falling 1.7% yesterday, following a raft of weaker-than-expected Chinese macro data this week. The latest Fed minutes will not be helping sentiment, with them suggesting that the US Fed may have some more work to do when it comes to monetary tightening. The strength in the USD over much of the week will also be providing further headwinds to the market. As for WTI, it settled below US$80/bbl for the first time since early August. However, whilst there are broader market concerns, oil fundamentals remain largely constructive as continued OPEC+ supply cuts should ensure that we see sizeable inventory draws for the remainder of the year.  The EIA’s weekly inventory report was largely constructive, showing that US commercial crude oil inventories fell by 5.96MMbbls over the last week.  This leaves crude oil inventories at a little under 440MMbbls, which is the lowest level since the start of the year. Crude oil inventories at Cushing fell by 837Mbbls, leaving them at 33.8MMbbls- levels last seen back in April. The large draw in commercial inventories was largely driven by a rebound in crude oil exports, increasing 2.24MMbbls/d WoW. Refiners also increased their run rates by 0.9pp over the week to 94.7%. Although despite stronger refinery activity, gasoline inventories still fell by 262Mbbls, whilst distillate stocks grew by 296Mbbls. Labour talks in Australia look as though they will roll into next week in an attempt to avoid strike action at several LNG facilities after there was no breakthrough in negotiations earlier this week. Reports suggest that talks will continue next Wednesday. The fact that talks are expected to continue next week has provided some comfort to the market, with TTF settling  2.65% lower yesterday. For Europe, given the comfortable storage situation (90% full), we would need to see a large amount of the roughly 41mtpa LNG capacity at risk, disrupted for a prolonged period, in order to be overly bullish for prices.

The Commodities Feed: Australian LNG strike risks ease We are likely to see further downward pressure in natural gas prices today with Woodside and unions reaching an in-principal agreement. This means that strike action may be avoided at the North West Shelf. Unions will meet today to discuss Woodside’s ‘strong’ offer.   Energy - Unions reach in-principle agreement European natural gas prices came under pressure yesterday. TTF prices settled more than 14% lower on the day as the market awaited news on the outcome of talks between Woodside and unions. This morning, both Woodside and unions have said that they have reached an in-principle agreement. The Offshore Alliance will meet today in order to discuss Woodside’s offer, an offer which they have said is ‘strong'. Obviously, we will need to see what the unions finally decide at their meeting today, but all indications at the moment look promising that strike action at the North West Shelf will be avoided. This suggests that we could see a further sell-off in European gas and Asian LNG prices today. However, even if a deal is made with Woodside, talks with Chevron are still ongoing, where there is 24.5mtpa of capacity at risk. The oil market saw some further weakness yesterday. There has been increased noise in recent days about possible supply increases from Iran and Iraq. We can now also add Venezuela to the list, with reports that the US administration is in talks with Venezuela about easing sanctions in return for fairer elections next year. EIA data released yesterday show that US commercial crude oil inventories fell by 6.13MMbbls last week, to leave total crude oil inventories at less than 434MMbbls - the lowest level this year. Crude oil stocks at Cushing also fell by 3.13MMbbls over the week. Meanwhile, refined product numbers were less constructive with gasoline and distillate inventories increasing by 1.47MMbbls and 945Mbbls respectively. Total product supplied (implied demand) was also weaker over the period, falling 498Mbbls/d WoW.

The Commodities Feed: Oil resists risk-off move The oil market managed to settle higher yesterday, going against the broader risk-off move seen in markets. The data calendar is fairly quiet today with just the usual EIA inventory numbers out later.   Energy - Gasoil cracks weaken Despite the heavy sell-off in equities yesterday, along with further strength in the USD, ICE Brent managed to settle a little more than 0.7% higher on the day. The price action suggests that tightening fundamentals are largely driving the market at the moment. Although clearly, external influences will be providing some headwinds to the oil market. Overnight the API released its latest US inventory numbers. Overall the report was largely neutral with crude oil inventories rising by 1.59MMbbls over the week, while gasoline inventories fell by just 70Mbbls. More supportive numbers from the release were the 1.7MMbbls decline in distillate fuel oil stocks and the 828Mbbls decline in Cushing crude oil inventories. The decline in inventories at the WTI delivery hub continues to see the prompt WTI spread trade into deep backwardation and it is currently trading at over US$1.60/bbl. The more widely followed EIA inventory report will be released later today. Gasoil cracks have continued to come under pressure this week despite the Russian export ban on diesel and gasoline. The November ICE gasoil crack is holding just above US$30/bbl. The lack of sustained strength in the gasoil market following the announcement appears to reflect expectations that the Russian ban will not remain in place for very long given domestic storage constraints. In recent days we have already seen the Russian government tweaking the ban by allowing the export of low-quality diesel and bunker fuel.

The Commodities Feed: Positive economic sentiment helps to boost prices The Fed’s decision to keep interest rate hikes on pause for a second consecutive time has bolstered economic sentiment and supported commodity prices, including energy and metals. Fresh mine closures have provided additional support to zinc, with prices climbing to around US$2,600/t yesterday.   Energy – OPEC oil output held stable ICE Brent has been trading firm this morning on positive economic sentiment after the US Fed continued to pause interest rate hikes. The hawkish tone remains in the accompanying statement. Lower crude oil inventory in the US and Europe also continued to be supportive of crude oil prices. Preliminary OPEC production numbers for October suggest a broadly stable output as the modest increases across most of its African members offset the declines elsewhere. According to a Bloomberg survey, OPEC output increased by 50Mbbls/d MoM to 28.1MMbbls/d last month. Nigeria led the gains, with their production rising by 60Mbbls/d to 1.5MMbbls/d followed by Venezuela (+30Mbbls/d), Congo (+20Mbbls/d) and Gabon (+20Mbbls/d). The output additions were partially offset by declining production in Iraq (-40Mbbls/d), Iran (-30Mbbls/d), Kuwait (-20Mbbls/d) and Libya (-20Mbbls/d). The latest numbers from the EIA weekly inventory report show that US commercial crude oil inventories increased by 0.8MMbbls over the last week. Earlier, API reported an inventory build of 1.35MMbbls while the market expected a build of around 1MMbbls. Total crude oil inventory (excluding SPR) at around 421.9MMbbls remains about 5% below the five-year average at this point in the season. US crude oil production remained unchanged at 13.2MMbbls/d. As for refined products, gasoline stocks rose by 0.1MMbbls, while distillate stocks fell by 0.8MMbbls. US refinery utilization softened further to around 85.4% as refineries aim to complete maintenance activity before winter demand kicks in.

The Commodities Feed: Oil demand risks linger Weak Chinese oil import data has added fresh con cerns for the oil market. The EIA report also failed to provide support as a significant rise in the refined product inventories clouded the expectations for a seasonal demand pickup. Energy – China's crude oil imports drop The weakness in the oil market persists, with ICE Brent settling down by around 4% yesterday to below US$75/bbl; ICE Brent has dropped by nearly 10% since the OPEC+ meeting. Weaker demand data from China has further weighed on the sentiment in the short term. The latest trade data from China shows that crude oil imports in the country dropped 9.2% YoY (first annual decline since April) to 42.4mt (10.3MMbbls/d) in November on slowing demand from refineries, weak economic indicators, and higher inventories. Comparatively, China imported around 49mt of crude oil in October 2023, showing a big fall in demand for the fuel. Cumulatively, China’s crude imports have increased by 12% YoY to 515.6mt for the first eleven months of the year, although most of it could be attributed to high imports in the 2nd and 3rd quarters of the year. The EIA’s weekly US inventory report was fairly mixed yesterday. US commercial crude oil inventories fell by 4.6MMbbls over the last week as the refineries increase their capacity usage during fall maintenance. Earlier, API reported an inventory withdrawal of 0.6MMbbls while the market expected withdrawals of around 0.8MMbbls. Total crude oil inventories (excluding SPR) now stand at 445Mbbls and are about 1% below the five-year average. Meanwhile, oil inventories at Cushing, Oklahoma fell by 1.83MMbbls to 29.6MMbbls. The EIA said that the US crude oil production fell by 0.1Mbbls/d to 13.1MMbbls/d last week. As for refined product inventories, gasoline inventories rose by 5.4MMbbls, against a forecast for a buildup of 1.2MMbbls. Distillate stockpiles increased by 1.3Mbbls last week, higher than the expectations for a buildup of 1.1MMbbls. Meanwhile, refineries operated at 90.5% of their capacity, up 0.7% from the previous week, but 5% lower than the same period last year.  

The Commodities Feed: EU sanction plans on Russian aluminium An easing USD offered support to the commodity complex, with oil prices edging higher this morning. On the inventory side, API numbers remained largely bullish for the oil market. Meanwhile, recent reports of EU plans to sanction Russian aluminium helped to lift aluminium prices.   Energy – Weaker USD supports the complex The oil market has been trading higher this morning as a sharp drawdown in oil inventories reported by API helped to improve the broader sentiment. Meanwhile, a softer dollar also supported the complex. The prompt spread for Brent has moved into a deeper backwardation of US$0.43/bbl up from just US$0.03/bbl at the start of the year, indicating tighter near-term conditions. Recent numbers from the American Petroleum Institute (API) reported yesterday remained largely constructive. US crude oil inventories fell by 6.67MMbbls over the last week, significantly larger than the market expectations. Similarly, Cushing crude oil stocks are reported to have decreased by 2.03MMbbls. On the other hand, a sharp rise in gasoline stocks weighed on demand expectations. API reported that gasoline stocks jumped by 7.2MMbbls while distillates inventories fell by 0.25MMbbls, over the week ending 19 January. The more widely followed EIA report will be released later today. Meanwhile, the geopolitical situation in the Middle East remained uncertain. Qatar delayed LNG shipments to Europe as the ongoing tensions in the Red Sea are slowing shipment deliveries. It has been reported that Qatar has diverted at least six shipments heading to Europe from its regular Red Sea route since 15 January. However, despite the transport challenges, Qatar has not reduced its LNG exports with shipments for the last two weeks estimated to be up 7% compared to the same period last year. The gas market has managed to remain largely unaffected so far with the recent disruptions in the Red Sea. European gas futures continue to trade near six-month lows due to weak industrial demand, availability of alternative LNG supply and higher inventory levels.