Market News
Oil Falls as Traders Weigh Ukraine Deal and China Outlook - BLOOMBERG
(Bloomberg) -- Oil fell to the lowest level in almost two months, with traders weighing renewed signs of optimism surrounding a deal to end the war in Ukraine and mixed economic data from China.
West Texas Intermediate was below $57 a barrel in thin trading ahead of the Christmas and New Year holidays, sliding as stocks wavered. Monday’s talks between the US and Ukraine were “very constructive,” Ukrainian President Volodymyr Zelenskiy said, while US officials described the meetings as positive in almost every respect. An agreement to end the conflict could lift restrictions on the flows of Russian oil, adding to an already well-supplied market.
Zelenskiy’s comments added to earlier bearish momentum on signs of weakness in China’s economy that would potentially limit a key source of demand for crude — outweighing news that the country’s apparent oil demand and refining activity increased in November.
“Crude continues to trade heavy as headlines this morning suggest there’s growing consensus around elements of a potential Russia-Ukraine ceasefire,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “While a ceasefire wouldn’t trigger a sudden wave of Russian barrels returning to market, it would materially reduce the risk of future supply disruptions.”
Oil is set for an annual loss, with supply set to exceed demand this year and next. Concerns about the glut are showing up in the key Middle Eastern crude market, and trend-following commodity trading advisers were 100% short in both Brent and WTI on Monday, according to data from Bridgeton Research Group.
Still, there are plenty of geopolitical inputs at play. Even as US-Ukraine talks advanced, Ukraine has intensified attacks on Russia’s Caspian region, hitting energy production and refining assets. Meanwhile, the market is also weighing attacks on shipping in the Black Sea and the risk of US military action in Venezuela after the Trump administration detained a supertanker last week.
--With assistance from Rob Verdonck and John Deane.
