Oil is set for a weekly loss after choppy trading in which concerns over a demand-sapping slump clashed with signals of tight supply.
West Texas Intermediate eased toward US$102 a barrel, putting the US benchmark on course for a weekly fall of almost 6%. Prices have swung in a range of more than US$16 this week, which saw both WTI and Brent briefly drop below US$100.
Investors remain concerned that restrictive US monetary policy could herald a recession, and oil has been dragged lower alongside other commodities. Two of the Federal Reserve’s most hawkish policy makers, Christopher Waller and James Bullard, backed raising interest rates by another 75 basis points this month to curb red-hot inflation, while also playing down concerns of a slump.
Still, physical signals remain robust, especially in the US. In addition, there may be interruptions to supplies. A key export route for Kazakh oil risks being suspended as it appeals a Russian court order for it to temporarily shut down.
Crude’s volatile trading means that it’s well down from last month’s high but still up more than 35% this year following Russia’s invasion of Ukraine. The complex market outlook has spurred banks to offer starkly different scenarios for prices, with Goldman Sachs Group Inc. remaining broadly bullish while Citigroup Inc. has said the commodity is at risk of a tumble.
Oil markets remain in backwardation, a bullish pattern marked by near-term prices trading above longer-term ones. Brent’s prompt spread -- the difference between its two nearest contracts -- was US$3.62 a barrel in backwardation, up from US$2.69 a barrel a month ago.
