- Oil reverses earlier gains after bearish U.S. economic data
- The U.S. CPI moderated slightly, from 8.5% in July to 8.3% in August. This exceeded the 8.1% forecast made by WSJ economists
- Treasury yields surged after the data, while S&P 500 index futures fell, and the dollar rose
- Tuesday's inflation report was highly anticipated ahead of the Federal Reserve's upcoming monetary policy meeting in late September
- This would likely increase the probability of a third consecutive 75 basis-point interest rate hike by the central bank
- Last week, Chair Jerome Powell said that the bank would act "forthrightly" to achieve price stability, and some policymakers voiced support for another historically significant rate hike
- Renewed COVID-19 curbs China, the world's second-largest oil consumer, continues to weigh on crude prices
- The possibility of the Iranian nuclear agreement being saved in the foreseeable future is shrinking (BBG)
- U.S. Secretary of State Antony Blinken said it was 'unlikely' the U.S. and Iran would reach a new nuclear deal anytime soon and warned of "a step backward" in Iran's position
- "What we've seen over the last week or so in Iran's response to the proposal put forward by the E.U. is clearly a step backward and makes prospects for an agreement in the near-term, I would say, unlikely," said Blinken at a press conference in Mexico City
- His remarks coincide with a recent similar statement made by France, Germany, and the U.K. over Iran's commitment to a new deal
- Morgan Stanley and UBS Group cut their near-term outlooks for Brent crude by as much as $15/Bbl in light of the economic slowdown and Russian flows rerouting (BBG)
- M.S. lowered its forecast for the 4Q22 by $5 to $95/Bbl, while it cut its price outlook for the 3Q22 by $12 to $98/Bbl
- The bank maintained its quarterly projections for 2023 at $100/Bbl and above
- They added that Russian oil exports are expected to decline significantly, with an estimated drop of 1.5-2.0 MMBbl/d into early 2023
- UBS Group cut its year-end projection for Brent by $15 to $110/Bbl
- The bank added that despite an increase in crude imports in August, China's restrictions would prolong the near-term demand rebound
- Russian exports have held up better than expected, with large volumes of crude flowing into European nations like Italy
- Brent is projected to rebound to $125/Bbl by the end of September 2023 as the market becomes more competitive due to the end of strategic reserve sales and increased demand for petroleum products to generate electricity
- M.S. lowered its forecast for the 4Q22 by $5 to $95/Bbl, while it cut its price outlook for the 3Q22 by $12 to $98/Bbl