Oil faltered as investors weighed concerns that a global slowdown will erode demand against still-solid physical market signals.
est Texas Intermediate rose towards $109 a barrel after falling more than 1 percent earlier in the session. Trading volume on Monday is likely to be weaker than usual as the US approaches the July 4th pause.
Crude oil was shaken last month as signs of an imminent US recession prompted a sell-off in commodities. Still, supply disruptions, including in Libya, offset some of the weakness. Key time spreads also show a resilient market.
Oil remains more than 40 percent higher this year after being boosted by the war in Ukraine, which sparked a wave of sanctions on Russian flows. Many product prices remain high and Vitol Group, the largest independent oil trader, warned over the weekend that rising fuel costs are beginning to weigh on demand.
More pressure will build as the year progresses, said Vivek Dhar, mining and energy commodities analyst at the Commonwealth Bank of Australia, in an interview with Bloomberg Television. “For energy, we definitely see demand being destroyed by the end of this year and prices falling as a result.”
Still, oil markets remain in backwardation, a bullish pattern characterized by short-term prices charging a premium to longer-term prices. Brent’s prompt spread — the difference between the two closest contracts — was $3.77 a barrel backwardation, more than $1 higher than a month ago.
High gasoline prices are a challenge for US President Joe Biden, who has been tapping strategic reserves and urging Middle Eastern suppliers to increase production in order to cut it. In a tweet, Biden urged companies that operate gas stations to lower prices. The post drew criticism from Amazon.com Inc. founder Jeff Bezos.
Concerns about a potential US recession – which would threaten oil demand – have escalated as the Federal Reserve quickly hikes interest rates to combat the fastest inflation in decades. Minutes of the central bank’s June meeting are due to be released on Wednesday.
While officials in China appear to have brought previous coronavirus outbreaks in megacities under control, the nation’s Covid-zero target in the eastern provinces faces a new challenge. Several hundred local cases were reported over the weekend, including in Anhui province.
https://www.independent.ie/business/world/oil-swings-as-traders-grapple-with-recession-concerns-41811269.html Oil falters as traders grapple with recession worries