Crude marginally higher early Fri after paring Wed's strong gains - Sept. 29, 2023

  • Crude futures were marginally firmer early Friday in Asia. Broadly, the complex appeared to be slipping back into consolidation mode, having unwound a substantial part of Wednesday’s strong gains in Thursday’s session.
  • The pullback confirmed that the price jump triggered by the US Energy Information Administration data on Wednesday showing domestic crude stockpiles sinking to fresh multi-month lows was overdone.
  • There was some news on the oil fundamentals front Thursday from Russia and China but neither was big enough to sway sentiment.



Crude keeps $100 in sight as supply fears tighten grip on sentiment - Sept. 29, 2023

It seemed like another eventful week in the oil markets, the highlight of which was a seemingly mundane weekly EIA stocks report setting the stage on fire. At one point, Brent appeared poised to make another dash for the century mark, but stopped well short of it, and retreated. 

But take a few steps back, and you see nothing changed in the big picture. As the third quarter comes to an end and the fourth one brings the northern hemisphere’s winter demand bump into view, we have a market in the stranglehold of supply fears and increasingly prone to bursts of upside volatility. 

There was plenty of negative sentiment in the broader financial markets, carried over from the previous week, as investors continued to temper their economic optimism in line with the Fed’s promise of higher-for-longer interest rates, but crude remained insulated. The US dollar climbed to fresh 10-month highs, but also failed to weigh on crude prices, which marched higher in tandem.

The US Personal Consumption Expenditures or PCE price index for August due out later Friday could send the stock markets gyrating again, being the Fed’s preferred gauge of inflation, and therefore a key input in money managers’ bets on the central bank’s monetary policy trajectory. But crude will likely continue to follow its own Pied Piper: the one playing a bullish tune of tightening supply and declining inventories.