- Oil extends losses amid reports of bearish economic data and storage build
- Feb ’23 loses nearly 20c this morning to trade around $79/Bbl
- Retail sales in the U.S. fell by the most in a year in December (down 1.1%), while manufacturing output declined by the most in nearly two years (down 1.3%) as higher borrowing rates reduced demand for goods
- However, Federal Reserve officials said interest rates must increase beyond 5% despite signals of subsiding inflation and slowing economic activity
- The API reported a 7.6 MMBbl build in commercial stockpiles for the week ending Jan 13
- The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of six international currencies) fell to its lowest since June 2022
- A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
- Saudi Aramco sees a demand rebound this year as China reopens its economy (BBG)
- “We are starting to see good signs coming out of China. Hopefully, in the next couple of months, we’ll see more of a pickup in the economy there,” said Aramco’s CEO Amin Nasser
- Nasser reiterated Saudi Arabia's long-held view that the market will suffer as a result of underinvestment in the industry in the past few years
- He added that the world would require 4-6 MMBbl/d of new supply only to compensate for the natural decline of maturing oilfields globally
- Currently, there is only 2 MMBbl/d of spare capacity, and when China reopens, that capacity is likely to shrink