Oil headed for its biggest weekly decline since early April as signs mounted that a global economic slowdown is dampening demand, with prices hovering near six-month lows.
est Texas Intermediate was Little changed below $89 a barrel on Friday and was about 10 percent lower on the week. US gasoline consumption has eased while crude stockpiles have increased.
Supply from Libya has increased, which has helped narrow time spreads on key oil futures and eased tightness in the market.
The pullback was broad based. Gasoline futures are also down 10 percent this week, a possible sign of further relaxation at the pump.
Physical oil spreads have narrowed and Brent’s prompt spread — that gap between the next two contracts that gauges the health of supply — was $1.79 a barrel backwardation, down from more than $6 a week ago.
After rallying for the first five months of the year, Crude Oil’s rally has reversed, with losses deepening this month after declines in June and July.
The sell-off, which erased gains sparked by Russia’s invasion of Ukraine, will ease the inflationary pressures that are seeping through the global economy and have prompted central banks, including the US Federal Reserve, to hike interest rates.
This week’s decline “has started to cause panic among many who were previously staunch oil bulls,” said Keshav Lohiya, founder of consulting firm Oilytics.
“Some market participants have begun to price in the possibility of contango entering the market with the recent sell-off, despite a relatively strong, healthy physical market.”
Still, there were some signs of bullishness as Saudi Arabia hiked prices this week and Opec + Warning of low capacity reserves.
Saudi Aramco increased its Arab Light grade for next month’s shipments to Asian refiners to a record $9.80 a barrel above the Middle East benchmark.
Traders and refiners had expected an even larger jump.
https://www.independent.ie/business/world/oil-price-falls-to-six-month-low-as-war-rally-fades-41893203.html Oil prices fall to six-month low as war rally eases