Oil posted its first weekly loss since June as low trading volumes left the market vulnerable to macroeconomic concerns, overshadowing signs of a tight physical environment.
(Bloomberg) — Oil posted its first weekly loss since June as low trading volumes left the market vulnerable to macroeconomic concerns, overshadowing signs of a tight physical environment.
West Texas Intermediate settled just above $81 a barrel, down nearly $2 for the week, as poor economic data and a widening housing slump in China weighed on risk assets. The gloom has eclipsed signs of a tighter crude market, including US stockpiles that declined to the lowest level since January.
Aggregate open interest for West Texas Intermediate fell to the lowest level since January on Thursday.
In the US, Federal Reserve policymakers have signaled they may not be done hiking rates to tame inflation, helping to lift Treasury yields and boosting the dollar. Officials will gather next week in Jackson Hole in Wyoming, potentially providing more clues on Fed sentiment.
The US currency notched a fifth weekly gain, the longest run in more than a year, which dulls the allure of commodities for overseas buyers.
Crude remains markedly higher from its lows in June, driven largely by supply cuts by OPEC+ linchpins Saudi Arabia and Russia. That has led many observers, including the International Energy Agency, to forecast tighter balances and higher prices before the year is out. However, Citigroup Inc. and others have countered that oil will weaken as consumption disappoints and supply swells.
“We expect that Brent will not break out of the yearly range,” Rabobank analyst Joe DeLaura said in a report, noting that Brent struggled to break through its 2023 highs in recent days. “We see the current macro overhang and worsening Chinese economic data to keep this ceiling intact.”
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–With assistance from Yongchang Chin and Chunzi Xu.
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