Crude oil rallied after moving into oversold territory earlier this week, triggering a wave of buying from opportunistic investors, ANZ commodity strategists note.

Oil prices remain depressed

“The recent slump was driven by concerns of a hard economic landing in the US. However, data showed the labour market is cooling gradually instead of rapidly slowing. This was supported by signs of robust demand in the US.”

“Commercial crude oil stockpiles fell by a larger than expected 4,649kbbl last week, while gasoline and distillate inventories also recorded large drawdowns. The market continues to muse over OPEC’s next move. The producer group announced earlier this year that it plans to increase output in Q4 as the market recovered.”

“However, prices remain depressed. This has seen Saudi Arabia’s sales from oil exports fall to a three year low of USD17.7bn in June. This could see these plans delayed in an effort to support prices.”