Oil endures choppy start to week with demand concern to the fore

Oil endures choppy start to week with demand concern to the fore
# 08 August 2022 12:18 (UTC +04:00)

Oil shook off an early slump at the week's open to push higher as investors weighed up prospects for demand ahead of a barrage of intelligence from leading energy players on the market outlook, APA-Economics reports citing Interfax.

West Texas Intermediate flipped to a gain, rising toward $90 a barrel after initially slumping more than 1pc. Investors have backed away from commodities in recent months as slowing growth feeds concern that energy usage will drop, including for gasoline. That helped WTI to sink by almost 10pc last week.

Crude has had a roller-coaster ride in 2022, soaring in the opening months of the year following Russia's invasion of Ukraine, then sinking from June as global slowdown concerns gathered pace. Elevated inflation has prompted central banks, including the US Federal Reserve, to jack up interest rates, with investors wagering that more hikes remain in store this half.

Oil is "down but not out," Goldman Sachs Group Inc. analysts, including Damien Courvalin, said in an Aug. 7 note that both reduced the bank's near-term price forecasts while making a case for a rebound. "We continue to expect that the oil market will remain in unsustainable deficits at current prices."

With prices just above a six-month low, investors are in line for a deluge of market commentary this week. The US Energy Information Administration is set to issue its short-term outlook on Tuesday, followed by monthly snapshots from producer group OPEC and the International Energy Agency on Thursday.

Oil's initial drop on Monday came despite data released at the weekend that showed China's crude imports rose in July from the lowest in four years as travel and transportation activity improved after Covid-19 curbs eased. Still, the country's year-to-date total remains about 4pc lower.

While oil markets remain in backwardation, a bullish pricing pattern, key differentials have narrowed in recent weeks, suggesting an easing of tightness. Brent's prompt spread, the difference between its two nearest contracts, was $1.67 a barrel on Monday, down from $3.56 a month ago.

The drop in crude since June has been accompanied by a sustained retreat in gasoline prices, which will be welcomed by US President Joe Biden as his administration seeks to tackle inflation. Average nationwide retail gasoline prices in the US dropped for 54 days straight to Saturday to a little above $4 a gallon, according to auto club AAA. They peaked at a record above $5 in June.

Still, Goldman Sachs said the drop in pump prices was unlikely to last. "US retail fuel prices will rally into year-end," the bank said, predicting gasoline will climb back to $4.35 by the fourth quarter.

1 2 3 4 5 İDMAN XƏBƏR
#
#

THE OPERATION IS BEING PERFORMED