Crude extends retreat ahead of US rate decision
Quantum Commodity Intelligence – Crude oil futures in European trading hours Tuesday were drifting lower for a second session after struggling to gain a foothold amid sluggish Chinese data.
Front-month Feb25 ICE Brent futures were trading at $73.38/b (1020 GMT) versus Monday’s settle of $73.91/b.
At the same time Jan25 NYMEX WTI was trading at $70.08/b versus Monday’s settle of $70.71/b, while the more liquid Feb25 contract was trading at $69.74/b.
Oil benchmarks have struggled during the early part of the week following a rash of weak data from China, offsetting potentially lower exports due to tighter sanctions on Iran and Russia.
Expectations for a 25 basis point at this week’s Fed gathering have largely been priced in, but concerns over demand growth prospects for 2025 in the broader global economy have weighed on sentiment.
The S&P Global US flash PMI showed output growth at the end of the year at a 33-month high (56.6 from 54.9) amid a service sector surge, although manufacturing remains in contraction territory.
European PMIs showed activity contracting for a second consecutive month at a slower pace (49.5 from 48.3), while services returned to positive territory.
“Financial markets are looking at quite a contrast between developments in the US and abroad. Economic data out of the US has been strong relative to what has otherwise been softer data and updates in the global economy,” said LMAX Research in a client note.
Otherwise, gasoil cracks in Asia have rebounded strongly in the past two weeks, underpinned by lower exports from China, lifting the Singapore 10ppm gasoil paper crack over Brent at $16.20/b on Monday, the highest since late November.
