Oil prices tumbled today. Overnight saw gains on the heels of China reopening hope (and optimistic IEA forecasts for 2023 demand) and then dumped it all back and then some during the US day session as macro data signaled a harder landing than so many have hoped for.
“Oil’s rally could not last after energy traders saw broad weakness across large parts of the US economy,” said Ed Moya, senior market analyst at OANDA.
“Crude-demand concerns are growing as the consumer is much weaker than expected and as the manufacturing sector is plunging.”
After last week's utterly chaotic looking inventory data (massive builds likely due to the national 'deep freeze'), traders are waiting for outputs to normalize somewhat, and expect this week's data to remain noisy.
Echoing last week's official data, we suspect API is playing catch-up as it reports huge builds in crude and at Cushing and a Distillates draw
WTI was hovering around $79.50 before the print and slipped lower after...
"Two wild cards dominate the 2023 oil market outlook: Russia and China. This year could see oil demand rise by 1.9 mb/d to reach 101.7 mb/d, the highest ever, tightening the balances as Russian supply slows under the full impact of sanctions. China will drive nearly half this global demand growth even as the shape and speed of its reopening remains uncertain," the IEA said.