Oil Heads For Weekly Loss As Recession Fears Muddle Outlook
Track the latest oil prices here.
(Bloomberg) -- Oil headed for a weekly loss after a week of volatile trading that saw recession fears run headlong into a fundamentally tight supply picture.
West Texas Intermediate crude futures traded near $104 a barrel, putting the US benchmark on course for a weekly fall of about 4%. Investors remain concerned that restrictive US monetary policy could herald a recession. Still, physical signals remain robust, especially in the US, where the prompt timespread, which closely reflects the supply and demand balances at the country’s biggest storage hub in Cushing, Oklahoma, surged to the highest level since March earlier in the week.
“Recession fears sent WTI crude below the $100 a barrel earlier in the week but that was overdone as risks to Russian supplies remain elevated,” said Ed Moya, senior market analyst at Oanda Corp. “The oil market clearly has a weaker crude demand outlook but a tight market remains as the supply situation remains vulnerable to potentially significant disruptions.”
Crude’s volatile trading means that it’s well down from last month’s high but still up more than 35% this year following Russia’s invasion of Ukraine. The complex market outlook has spurred banks to offer starkly different scenarios for prices, with Goldman Sachs Group Inc. remaining broadly bullish while Citigroup Inc. has said the commodity is at risk of a significant tumble.
Meanwhile, in the Permian Basin’s hub in Midland, Texas, inventories are about 600,000 barrels lower than last year, according to Geoffrey Craig, global energy analyst at Ursa Space. Outside of the US, a key export route for Kazakh oil risks being suspended as it appeals a Russian court order for it to temporarily shut down.
In China, meanwhile, investors are tracking efforts by Beijing to buttress growth after anti-virus lockdowns hurt the economy and energy consumption in the first half. The Ministry of Finance may allow local governments to sell 1.5 trillion yuan ($220 billion) of special bonds for infrastructure funding.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
