The crude oil price scaled to new heights again today as traders and hedgers weigh production cuts and a continuing run down of stockpiles. Earlier this week Saudi Arabia and Russia committed to maintain their production cuts through to the end of this year. The cuts of 1 million and 300k barrels per day respectively. The squeeze on supply appears to be having the desired effect of pushing prices higher in the near term but could have unintended consequences in the long run if the price of energy ramps up significantly over an extended period. Aside from potential demand destruction, the Federal Reserve has made it clear that they are resolute in its fight on inflation. If the cost of energy leads to consistently higher prices at the pump, it might contribute to keeping rates higher for longer than would otherwise be the case. Overnight the US ISM services PMI for August printed at 54.5, notably above forecasts of 52.5 and 52.7 prior. This saw the interest rate market reassess the Fed’s hiking cycle and Treasury yields continued to climb in the aftermath. With the anaemic outlook for China’s growth and Europe facing its own headwinds, perhaps OPEC+ see slower global economic activity as a reason for the production cuts. Other data released overnight saw the American Petroleum Institute (API) report reveal another drop of -5.52 million barrels for the week ended September 1st. This was much lower than the -1.429 million anticipated and comes on top of the massive depletion of -11.486 million prior. Later today the market will be watching out for the US Energy Information Agency’s (EIA) weekly petroleum status report. The market is forecasting for a decrease of around 2 million barrels. The front-month Bloomberg Nymex WTI crack spread has collapsed over the last week, trading as low as US$ 29.11 a barrel overnight, after nudging US$ 44 in August. The crack spread is the gauge of gasoline prices relative to crude oil prices and reflects the profit margin