Oil prices wavered, after trading near the highest level in almost nine months as key US inflation data matched expectations and traders weighed signs of tighter supplies.
(Bloomberg) — Oil prices wavered, after trading near the highest level in almost nine months as key US inflation data matched expectations and traders weighed signs of tighter supplies.
West Texas Intermediate futures traded just below $84 a barrel after climbing 3% over the previous two sessions.
OPEC’s monthly report suggested that the oil market is on track for a deficit of 2 million barrels a day this quarter as the producer group and its allies continue with their supply cuts through to the end of September. Signs of fresh market strength have abounded in recent days, with key market gauges pointing to increased levels of tightness, while options markets also turned more bullish.
Still, demand concerns remain as the market weighs the longer-term impact of the Federal Reserve’s aggressive rate-hike cycle.
Wednesday’s most significant macro-economic data showed US consumer prices rose 0.2% in July, in line with economist expectations. Equities rallied and the dollar fell after the figures heightened bets that the Fed will pause its rate hikes in September.
“Hot money continues to flow into the oil complex,” said Keshav Lohiya, founder of consultant Oilytics. “The question remains if this is just a beginning of speculative money flowing in, or a bull trap before the majority of market participants return in September.”
There’s heightened tension between Kyiv and Moscow after a Ukrainian drone attacked a Russian-flagged oil tanker over the weekend in the Black Sea, a key waterway for the nation’s exports. Oil has rallied since late June as Saudi Arabia and Russia pledged supply curbs, although headwinds still persist including a sluggish economic recovery from China.
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