EBC Markets Briefing | High rates rear its ugly head in the oil market

Oil prices fell in early Asian trading on Monday, extending losses from the previous session after oil ended the week 2-3% lower amid ebbing rate cut expectations, according to the latest EBC Group Corporate News.

White House national security adviser Jake Sullivan told CNN on Sunday that negotiators for the US, Egypt, Qatar and Israel had agreed on the basic contours of a hostage deal during talks in Paris.

However Israeli PM Netanyahu said it was not clear yet whether a deal would materialise. The Iran-aligned Houthis is continuing their attacks on shipping in the Red Sea.

The EIA said last week that crude inventories had risen by 3.5 million barrels in the week ending 16 Feb. That compared with analysts' expectations in a Reuters poll for a gain of 3.9 million barrels.

Oil has been caught between the bullish tailwinds of lower OPEC output and rising Middle East tensions, and bearish concerns about flagging consumption in top importer China this year.

China saw arrivals at 11.31 million bpd in January, just below the 11.48 million bpd imports in December, according to LSEG data. Russia kept its top spot as the country’s largest crude supplier.

WTI crude dipped below its 200 SMA and its lowest since 8 Feb on Friday. The immediate support is located around $75.5, below which the significant downside potential will be unlocked.

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