Oil steadied as traders await official US inventory data following a volatile start to the week marked by unexpected OPEC+ supply cuts.
(Bloomberg) — Oil steadied as traders await official US inventory data following a volatile start to the week marked by unexpected OPEC+ supply cuts.
West Texas Intermediate traded near $81 a barrel after closing at the highest level in almost 10 weeks. The industry-funded American Petroleum Institute reported nationwide crude stockpiles fell by 4.3 million barrels, including a drop at the key storage hub in Cushing, Oklahoma, according to people familiar with the data.
Figures from the US Energy Information Administration are due later Wednesday.
Crude rallied by almost 7% in the first two days of the week after the Organization of Petroleum Exporting Countries and its allies including Russia blindsided the market with a surprise supply cut. The cartel’s move, apparently aimed at investors betting against gains, reinvigorated the debate among leading banks about whether crude can rally back to $100 a barrel.
“After the weekend’s OPEC+ announcement some kind of calm has been restored,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “The seismic cut from the producer group will unreservedly tighten the oil balance in May and beyond.”
Oil has risen by more than 20% since its lows in March, when a banking crisis harmed appetite for risk assets. Before the lift from the OPEC+ cut, the market was buoyed by expectations for a rebound in Chinese demand after the end of its Covid Zero policy, while a weaker dollar has helped to boost the allure of commodities priced in the US currency.
Crude’s gain came despite US data on Tuesday that pointed to a slowdown in the labor market, with the figures adding to speculation that the Federal Reserve may pause its run of rate hikes as inflation cools.
Key market metrics pointed to expectations for a tighter market. Brent’s December-December spread — the difference between the contract for the final month of this year and in 2024 — widened to as much as $5.76 a barrel. That’s up from about $3 a barrel a week ago.
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