Oil tracked equities to a small gain amid thin summer trading and a fundamental picture that’s locked in a stalemate between signs of tightening supplies and growing risks to demand.
(Bloomberg) — Oil tracked equities to a small gain amid thin summer trading and a fundamental picture that’s locked in a stalemate between signs of tightening supplies and growing risks to demand.
The nearest-term segment of the oil futures curve is signaling that supplies are being constricted amid production cuts from OPEC+ linchpins Russia and Saudi Arabia, though Iran’s booming exports are helping satiate the market. Low crude-trading volumes have exacerbated swings, with aggregate open interest hovering near the lowest levels this year as investors travel for holidays.
Meanwhile, refined products such as diesel — the workhorse fuel of the global economy — have started pricing in scarcity this winter, boosting their premium to the oil from which they are made. Gasoline futures in New York have risen by about 13% this year, outpacing crude.
Economic malaise in China — ranging from downbeat consumers to struggling exports — as well as stubbornly persistent inflation risks in the US contributed to oil’s decline last week, bucking a recent strong run. Chinese banks made a smaller-than-expected cut to their benchmark lending rate Monday, despite the central bank putting pressure on lenders to boost loans.
The annual Jackson Hole symposium in Wyoming, which features speakers including Federal Reserve Chair Jerome Powell, may provide clues on the direction of interest rates in the US.
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