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Oil fell for a fourth day as warnings from major US banks of a tough outlook for 2023 stoked concern over demand prospects and dented appetite for risk assets including commodities.
West Texas Intermediate fell below US$74 a barrel after futures sank almost 9 percent over the previous three sessions despite optimism surrounding China’s move to loosen strict virus curbs. Among the predictions, Goldman Sachs Group Inc. Chief Executive Officer David Solomon said that he saw “bumpy times ahead.”
Crude is limping into the end of the year, with the US benchmark heading for the first back-to-back quarterly drop since mid-2019 as central banks tighten policy.
The latest leg down comes at a complex moment, with traders assessing the fall-out from Group of Seven curbs on Russian oil, including a price cap that’s meant to punish Moscow for the war in Ukraine. The slump comes against a backdrop of dwindling liquidity, with waning interest stoking volatility.
Recession fears have “gripped the market as traders ponder monetary-policy tightening,” said James Whistler, managing director of brokerage Vanir Global Markets Pte in Singapore.
“We are also seeing an early pull back in liquidity, with traders exiting positions after a highly volatile year.”
In response to the cap, which has been set at US$60 a barrel, Russia is considering setting a price floor for its international oil sales. Moscow may either impose a fixed price for the nation’s barrels, or stipulate maximum discounts to international benchmarks at which they can be sold.
Traders are also tracking a visit by China’s President Xi Jinping to Saudi Arabia this week, during which he will take part in a summit with Saudi Crown Prince Mohammed bin Salman. – Bloomberg
Online Reporter