Oil Steadies as Concerns Over Demand Overshadow Saudi Output Cut - BLOOMBERG
(Bloomberg) -- Oil fluctuated as traders balanced an uncertain economic picture against Saudi Arabia’s bullish supply cut.
West Texas Intermediate futures rose above $72 a barrel, erasing an earlier loss. Official US stockpile data are due later, following an industry group report that showed a decline in crude inventories.
The global economy is set for a weak recovery from the shocks of Covid and Russia’s war in Ukraine, the Paris-based OECD said Wednesday. Separately, trade data for China in May painted a mixed picture.
Oil has lost around 10% this year amid concerns about China’s recovery and a rapid increase in interest rates by the US Federal Reserve. Russian crude flows remain high even after the nation said it would reduce output.
“Saudi cuts are playing second fiddle to worries about the state of the global economy,” PVM Oil Associates analyst Stephen Brennock wrote in a report. “Market players are not buying into the deficit story, nor are they convinced by China’s revival.”
China posted robust imports of commodities including oil in May. However, its trade exports fell by more than expected, adding to growth concerns.
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The American Petroleum Institute, an industry group, reported US crude inventories declined by 1.7 million barrels last week, while stockpiles of gasoline and distillate gained, according to people familiar with the data.
Official figures from the Energy Information Administration are due later. The EIA said Tuesday that it expects domestic oil consumption to grow at half last year’s rate.