Oil fell to its lowest since late February as macroeconomic headwinds dominate the market while traders wait and see how demand pans out in the world’s biggest consumer of the commodity.
(Bloomberg) — Oil fell to its lowest since late February as macroeconomic headwinds dominate the market while traders wait and see how demand pans out in the world’s biggest consumer of the commodity.
Crude looked set to decline more than 3% this week amid fears that recent economic data will impel the Federal Reserve to more aggressively raise interest rates, compounding pressure from China’s tempered economic projections.
Any bulls looking for a bump in prices from the supply side have so far been disappointed by resilient flows from Russia counteracting recent concerns of the longevity of the growth in US supply.
“Risk appetite is dominating as crude traders shy away from substantially increasing their positioning with prices locked into a tight range,” said Daniel Ghali, a commodity strategist at TD Securities.
The market has had a bumpy year so far, whipsawed by the opposing drivers of US slowdown concerns and China’s rebound. Most major banks expect demand to surge in the second half of the year, with Chinese international travelers playing a key role. Still, JP Morgan analysts led by Natasha Kaneva noted “the return of Chinese travelers has been slow.”
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