Market News
Oil Holds Near Month’s Low on Demand Concerns and Rampant Dollar - BLOOMBERG
(Bloomberg) -- Oil held close to this month’s low, following steep losses in the previous two days, amid a soft demand outlook in China, a stronger US dollar and concerns the market may flip to oversupply.
Brent crude edged higher near $72 a barrel, after shedding 5% over two sessions, while West Texas Intermediate traded below $69. The recent tumble has coincided with marked weakness in the nearest portion of the oil futures curve, pointing to a market that’s softening.
China’s latest measures to kick-start its economy stopped short of direct stimulus, and inflation remains weak. A gauge of the dollar hit a one-year high as investors adjust to Donald Trump’s electoral victory, making crude oil more expensive for most buyers. OPEC cut its oil demand growth forecasts for this year and next — which are far above those of other major agencies — for a fourth consecutive month.
Over the last few days crude has lurched lower within the relatively narrow range in which it has traded since the middle of last month. Traders continue to track tensions in the Middle East, the prospects of a second Trump presidency, and OPEC+ decisions on output. The outlook remains weak, with global supply expected to outpace demand next year.
“It’s less a demand issue and just a lot of supply,” Darren Woods, chief executive officer of Exxon Mobil Corp., said in a Bloomberg TV interview. “Demand is at record highs both for oil and for gasoline and diesel. So the demand is out there today, the industry has been very effective at supplying that demand.”
Weakness in nearby timespreads that gauge market health has sparked some concerns that oil is already drifting towards oversupply. The nearest WTI contract closed at its smallest premium to the next month since February on Monday, while a gauge of supplies at the key storage hub of Cushing, Oklahoma also traded in a bearish structure.
