Oil edges higher after slide below $100


Article content

LONDON — Oil edged up on Wednesday, a day after settling below $100 a barrel for the first time since April, and gains were limited by a U.S. supply report showing rising inventories and caution ahead of U.S. inflation data.

Despite a tight physical oil market, investors have sold oil futures on worries that aggressive rate hikes to stem inflation will slow economic growth and hit oil demand. Prices fell by more than 7% on Tuesday in volatile trade.

Brent crude was up 80 cents, or 0.8%, at $100.29 a barrel at 1120 GMT. U.S. West Texas Intermediate crude gained 74 cents, or 0.8%, to $96.58.

Advertisement 2

Article content

“Although I don’t rule out more downside surprises, I believe the recent selloff could be getting a little overdone,” said Jeffrey Halley of brokerage OANDA.

Brent is down sharply since hitting $139 in March, close to the all-time high reached in 2008. Renewed COVID-19 curbs in China have weighed on the market this week.

“The worry is that this could lead to a lockdown,” said Naeem Aslam at Avatrade of the Chinese COVID developments. “In addition to this, traders are worried about economic slowdown around the globe.”

The decline in crude futures has yet to be reflected in the strong physical oil market. Forties crude, one of the grades underpinning Brent futures, was bid at a record high premium to the benchmark of plus $5.35 a barrel on Tuesday.

Advertisement 3

Article content

On investors’ radar on Wednesday is the U.S. June consumer prices data, which economists expect to show that U.S. inflation has accelerated to 1.1% monthly and 8.8% annually.

And for the oil market, the latest U.S. supply report from the Energy Information Administration will be in focus. Analysts expect a decline in crude and gasoline inventories.

Still, according to figures from industry group the American Petroleum Institute, cited by sources on Tuesday, crude stocks rose about 4.8 million barrels, weighing on prices.

The market also is watching U.S President Joe Biden’s visit to the Middle East, where he is expected to ask Saudi Arabia and other Gulf producers to raise oil output. (Additional reporting by Muyu Xu; editing by Angus MacSwan and Jason Neely)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



Source link

Comments are closed.