Oil steady as tight market competes with recession fears

Article content

LONDON — Oil prices were largely steady on Monday, recovering from earlier losses as a relatively tight global supply picture competed with fears of a recession and a rising dollar.

Brent crude futures for October settlement gained 15 cents, or 0.2%, to $96.87 a barrel by 1105 GMT.

U.S. West Texas Intermediate (WTI) crude for September delivery – due to expire on Monday – were up 45 cents, or 0.5%, at $91.22.

The more active October contract was up 21 cents, or 0.2%, at $90.65.

High natural gas prices exacerbated by reduced supply from Russia is strengthening oil demand, said Ole Hansen, head of commodity strategy at Saxo Bank.

Advertisement 2

Article content

Brent crude had hit nearly $140 a barrel in early March but has since retreated as inflation hit multi-decade highs.

“While funds continued to sell crude oil in anticipation of an economic slowdown, the refined product market was sending another signal with refinery margins on the rise again, partly due to surging gas prices making refined alternatives, such as diesel, look cheap,” Hansen said.

Supply worldwide remains relatively tight, with the operator of a pipeline supplying about 1% of global oil via Russia saying it will reduce output again because of damaged equipment.

Meanwhile, the dollar index rose to a five-week high on Monday. A stronger U.S. currency is generally bearish for the market because much of the world’s oil trade is conducted in dollars.

Advertisement 3

Article content

Investors will also be paying close attention to comments by Fed Chair Jerome Powell when he addresses an annual global central banking conference in Jackson Hole, Wyoming, on Friday.

Pressuring prices, meanwhile, were worries over slowing fuel demand in China, the world’s largest oil importer, partly because of a power crunch in the southwest.

Beijing cut its benchmark lending rate on Monday as part of measures to revive an economy hobbled by a property crisis and a resurgence of COVID-19 cases.

Meanwhile, the leaders of the United States, Britain, France and Germany discussed efforts to revive the 2015 Iran nuclear deal, the White House said on Sunday, which could allow sanctioned Iranian oil to return to global markets. (Reporting by Noah Browning Additional reporting by Yuka Obayashi Editing by Jason Neely and David Goodman)



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.