OIL: Oil Off Intraday Lows, Significant Uncertainty Around Outlook

Oil prices continued declining during APAC trading today pressured by another very low China inflation print after falling over a percent on Wednesday. They are off their intraday lows now. WTI is down 0.2% to $73.16/bbl after falling to $72.84. Brent is also 0.2% lower at $76.00 following a trough of $75.68. The USD index is down 0.1%.

• China’s December CPI inflation eased further towards zero at only +0.1% y/y after 0.2% the previous month. The PPI improved slightly falling 2.3% y/y after -2.5%.
• 2025 has been widely forecast to have an oil surplus as China demand stays weak and non-OPEC output rises but there is significant uncertainty coming from the new US administration’s energy and sanctions policies. The next few months may provide clarity on this. Demand for Russian and Iranian oil seems to be impacted by current US sanctions but there is a significant chance that measures against Iran will be tightened substantially under President-elect Trump.
• Tariffs against Canada also remain a significant uncertainty. It is a large oil exporter to the US with the Midwestern refineries geared for the heavy crude it ships.
• The EIA reported US inventories fell 959k barrels last week, the seventh consecutive weekly decline, but product stocks continued to rise with gasoline up 6.33mn and distillate 6.07mn. Refinery utilisation rose 0.6pp to 93.3%.
• Later the Fed’s Harker, Collins, Barkin, Schmid and Bowman speak. US December Challenger job cuts, euro November retail sales, German November trade & IP print.