Oil steadied near $71 a barrel after four weeks of losses, though the US debt-ceiling negotiations injected a risk-off sentiment in broader markets that’s restraining crude’s relief rally.
(Bloomberg) — Oil steadied near $71 a barrel after four weeks of losses, though the US debt-ceiling negotiations injected a risk-off sentiment in broader markets that’s restraining crude’s relief rally.
West Texas Intermediate is finding support at the psychological level of $70, but the gains have been muted by a stronger dollar and falling equities amid increased concerns the US may default on its debts. Traders also are looking for new data to provide clarity on the economy’s trajectory.
“Oil is playing tug-of-war with a tight market and rising economic uncertainty as debt-ceiling talks will likely lead to some market stress,” said Ed Moya, senior market analyst at Oanda. “This week, energy traders will pay close attention to the retail sales report to see if the consumer remains in decent shape.”
Oil has dropped almost $10 a barrel this year on fears of a global recession and slower-than-expected demand from China. The shock OPEC+ production cut of more than 1 million barrels a day hasn’t materialized, and prices are trading at the levels they were before the announcement. Adding to the bearish picture, demand for physical barrels appears weak, while refinery margins — the profits that refiners make from processing crude into petroleum products like diesel and gasoline — remain low.
Still, transportation data from China is starting to show increased car usage, while air travel from the country is in a protracted rebound.
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–With assistance from Natalia Kniazhevich and Sri Taylor.
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