The Commodities Feed: Brent back at $80/bbl

The Commodities Feed: Brent back at $80/bbl

There were no surprises from OPEC+ yesterday. The group agreed to increase oil output by 400Mbbls/d in February as originally planned. The move from OPEC+ provides some comfort to the market as it signals that they are confident with the demand outlook in the coming months. As a result, Brent managed to settle at US$80/bbl yesterday, the highest level since late November. However, there is still a risk overshadowing the market. There are reports that another city in China went into lockdown yesterday after 3 cases of Covid-19 were detected. Clearly, China continues to pursue its zero covid policy and if we were to see more widespread lockdowns domestically that would be a concern for oil demand. The API reported overnight that US crude oil inventories declined by 6. 43MMbbls over the last week, which by itself appears constructive. However, this crude draw was more than offset by a build-up in refined product inventories. Gasoline and distillate fuel oil stocks grew by 7. 06MMbbls and 4. 38MMbbls respectively. If the EIA reports similar numbers later today, it would be the largest crude oil drawdown since late August. Metals were a mixed bag on the first trading day of the New