Oil fell earlier in the week as concerns over an economic slowdown overshadowed signs of a tight physical crude market.
est Texas Intermediate fell below $94 a barrel after capping a third weekly decline on Friday, the longest losing streak this year. The Federal Reserve is expected to approve another big rate hike this week as the Federal Reserve fights rising inflation and squeezes demand.
“While prices have been volatile, I expect renewed downward pressure on crude oil,” said Vandana Hari, founder of Vanda Insights. Fed meeting “will likely serve as another reminder of economic headwinds.”
The oil market has seen bouts of volatility of late, characterized by high volatility and low liquidity as investors juggle competing supply and demand outlooks. Crude oil is up about 25 percent for the year, although futures contracts gave up most of its gains after Russia’s invasion of Ukraine in late February.
Russia’s invasion has caused many consumers to shift away from the OPEC+ producer, and that has led to Saudi Arabia and Iraq diverting more oil to Europe. The US is pushing for a price cap on Russian crude oil to limit revenue going to the Kremlin to fund its war, and the second Treasury Department official will be in Europe this week to rally support for the measure .
While oil has been reeled by escalating fears that the US is headed for recession, veteran commodities trader Pierre Andurand says oil demand could beat expectations even if the global economy falters. Consumption growth has lagged behind its four-decade trend in recent years due to virus lockdowns and should return to normal levels, he said on Twitter.
The oil market is heavily bearish, a bullish pattern market as near-term prices command a premium to later prices. Brent’s prompt spread was $4.93 a barrel in backwardation, over $1 higher than at the start of the month.
A section of the massive Keystone Pipeline, which supplies Canadian crude oil to the main US storage center in Cushing, restored normal operations late Friday after a power interruption. As of mid-month, the service was still impacted by capacity reductions, according to a bulletin obtained by Bloomberg.
https://www.independent.ie/business/world/oil-drops-as-concerns-over-slowdown-offset-tight-crude-market-41864624.html Oil falls as worries of a slowdown offset tight crude market