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Oil fluctuated, with prices on course for a deep weekly loss, as investors weighed concerns that a potential global slowdown would hollow out energy demand against signs of still-tight physical markets.
US benchmark West Texas Intermediate crude traded above US$98 a barrel, more than 9 percent lower this week.
Over the past month, escalating fears that a looming recession will erode consumption have driven prices down even as the market continues to show signs that supplies remain tight at present.
Oil’s retreat means the world’s most crucial commodity has given up the bulk of the gains seen in the wake of Russia’s invasion of Ukraine, which lifted the US benchmark above $130 a barrel in March. Surging inflationary pressures have prompted the Federal Reserve to tighten policy aggressively, which in turn spurred expectations that a demand-sapping recession may lie ahead. The dynamic has largely overshadowed concerns over supply tightness.
“There isn’t much rational assessment,” said Vandana Hari, founder of Vanda Insights in Singapore. “The fears may not end but could get brushed aside when supply constraints are back to the fore.
“The market balance is tight.”
Oil markets remain in backwardation, a bullish pattern with near-term prices above longer-dated ones. Brent’s prompt spread — the gap between its two nearest contracts — was US$3,57 a barrel, up from US$2,43 a barrel a month ago.
Still, the industry-funded American Petroleum Institute reported US crude stockpiles rose 3,8 million barrels last week, including a gain at the key storage hub at Cushing, Oklahoma, according to people familiar with the widely-watched figures. Official data on holdings will follow later on Thursday.- Bloomberg
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