Oil remained under pressure amid a widespread malaise in global financial markets, even as Saudi Arabia and Russia reaffirmed that they will continue production cuts until the end of the year.
(Bloomberg) — Oil remained under pressure amid a widespread malaise in global financial markets, even as Saudi Arabia and Russia reaffirmed that they will continue production cuts until the end of the year.
Deteriorating sentiment across markets over the last few days, spurred by expectations of a longer period of higher interest rates, has stopped oil’s second-half rally in its tracks. Meanwhile, inventories at the largest storage hub in Cushing, Oklahoma, saw their first increase in eight weeks. Still, stockpiles nationwide continued to drain to the lowest since December 2022, and a key US pipeline has also seen lower flows this week.
West Texas Intermediate continued to fall Wednesday, slipping below $87 a barrel to the lowest since early September. The drop came even as OPEC+ leaders Saudi Arabia and Russia committed once again to continue additional production curbs until December.
Oil had rallied since mid-June as the alliance’s supply cuts tightened the market, with inventories shrinking and key timespreads indicating greater competition for prompt barrels. Still, the upsurge has run into resistance in recent sessions as investors fret that the Federal Reserve may not be done raising interest rates, with a strengthening dollar making commodities more expensive for most buyers. Major gains in US Treasury yields have also hurt raw materials.
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