Brent oil fell below $93 as the impact of rapidly tightening supplies was offset by low risk appetite across markets with investors pricing in a prolonged period of higher interest rates.
(Bloomberg) — Brent oil fell below $93 as the impact of rapidly tightening supplies was offset by low risk appetite across markets with investors pricing in a prolonged period of higher interest rates.
The global benchmark shed as much as 1.6% in London on Tuesday before paring those losses. The move mirrored a pullback in equities, with one of the broadest measures of global stock markets on track to match its longest losing streak in the past decade. Volatility in bond markets has also been rising.
That has stopped in its tracks a crude rally driven by signs of scarce supply. Closely-watched timespreads continue to trade in a large backwardation, indicating a market deficit.
Oil has surged more than 25% since end-June on the back of supply curbs from OPEC+ leaders Saudi Arabia and Russia, and is set for its biggest quarterly gain since early 2022. That rekindled talk of $100-a-barrel crude, but the gains lost momentum over the past week amid concerns over the macroeconomic backdrop.
“Oil supply is expected to underwhelm demand in the foreseeable future and therefore any weakness, even if it is achingly startling, should not last,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd.
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