Oil shrugged off an early slump in the week open to surge higher as investors weighed the demand outlook ahead of a flood of information from leading energy players on the market outlook.
est Texas Intermediate made a gain and surged toward $90 a barrel after initially falling more than 1 percent. Investors have retreated from commodities in recent months as slowing growth fuels fears that energy use will fall, including for gasoline. That helped WTI tumble nearly 10 percent last week.
Crude oil has had a rollercoaster ride in 2022, surging in the early months of the year following Russia’s invasion of Ukraine and then falling from June as worries about the global slowdown gathered momentum. Elevated inflation has prompted central banks, including the US Federal Reserve, to raise interest rates, with investors betting on more rate hikes this half of the year.
Oil is “down but not out,” analysts at Goldman Sachs Group Inc., including Damien Courvalin, said in a note Aug. 7 that both reduced the bank’s near-term price forecasts while calling for a recovery. “We continue to believe that the oil market will remain in unsustainable deficits at current prices.”
With prices just above a six-month low, investors are in for a barrage of market commentary this week. The US Energy Information Administration will release its near-term outlook on Tuesday, followed by monthly snapshots from producer group OPEC and the International Energy Agency on Thursday.
Oil prices’ initial drop on Monday came despite data released over the weekend showing China’s crude oil imports rose in July from a four-year low as travel and transport activity improved after Covid-19 restrictions eased. Still, the country’s total remains about 4 percent lower year-to-date.
While oil markets continue to remain in backwardation, a bullish price pattern, key divergences have narrowed over the past few weeks, suggesting an easing of tightness. Brent’s prompt spread, the difference between the two closest contracts, was $1.67 a barrel on Monday, up from $3.56 a month ago.
The fall in crude oil since June has been accompanied by a sustained drop in gasoline prices, which will be welcomed by US President Joe Biden as his administration tries to fight inflation. Average nationwide retail gasoline prices in the US fell to just over $4 a gallon for 54 days straight through Saturday, according to the AAA. They hit a record high of over $5 in June.
Still, Goldman Sachs said the drop in pump prices is unlikely to last. “US retail fuel prices will rise through year-end,” the bank said, forecasting gasoline to rebound to $4.35 by the fourth quarter.
https://www.independent.ie/business/world/oil-endures-choppy-start-to-week-with-demand-concern-to-the-fore-41896367.html Oil endures a choppy start to the week with demand concerns at the fore