Oil Rally Falters As Weak Fuel Demand Offsets Strong Crude Draws - BLOOMBERG
(Bloomberg) -- Oil’s rally stalled in its third day as lagging fuel demand offset data showing a sharp decline in US crude inventories.
West Texas Intermediate flip-flopped after rising to a two-week high amid slumping distillate futures. Demand for diesel, which is used as both an industrial and heating fuel, continues to languish at seven-year seasonal lows, a sign of lackluster economic activity.
“We are in softer period seasonally and we have had mild winter in the Northeast, so I am not surprised that there is weakness there,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth.
Earlier, oil rose to above $74 a barrel after a government report showed US stockpiles fell more than 7 million barrels last week. Momentum-driven commodity trading advisors helped prop up crude’s rebound rally as traders bought back into oil futures.
“This buying activity should help prices settle back into their trading range, before tightening physical markets support higher prices, ” wrote Dan Ghali a commodity strategist at TD Securities in a note to clients.
Oil has been buttressed by factors including supply risks and resurgent demand from China as the nation recovers from pandemic lockdowns. Uncertainty continues to weigh on the market, following a banking crisis that has hit institutions in both the US and Europe.