Oil fell as the market’s breakneck rally that pushed prices to $95 a barrel on Tuesday took a breather.
(Bloomberg) — Oil fell as the market’s breakneck rally that pushed prices to $95 a barrel on Tuesday took a breather.
Brent crude slipped 0.8% to about $93.50 a barrel. Crude has been flashing overbought on a technical basis for several days, suggesting the climb to a 10-month high may have been overdone.
Crude has roared higher thanks to supply curbs from OPEC+ linchpins Saudi Arabia and Russia, as well as brighter outlooks in the two biggest economies, the US and China. While the upswing has reignited talk of a return to $100 oil, that may be a headache for central bankers, including those at the Fed who decide policy later Wednesday.
“The impressive run-up in crude oil prices had to come to a temporary halt and today’s Fed decision on interest rates provides the perfect excuse to bank some money,” PVM Oil Associates Ltd. analyst Tamas Varga wrote in a note.
Widely-tracked measures of supply and demand reinforce signals that the market is tightening. In the US, the industry-funded American Petroleum Institute said that nationwide inventories shrank by 5.25 million barrels last week, including a drawdown at the Cushing hub, according to people familiar with the figures. A separate assessment from AlphaBBL Corp. also showed a drop at the Oklahoma storage site. Official data come later on Wednesday.
In addition, timespreads retain a strong tone. The gap between WTI’s two nearest December contracts was a little below $10 a barrel in a bullish backwardated structure, more than twice the figure a month ago.
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