Oil swung between losses and modest gains as concerns that sluggish economic growth will eat into demand were weighed against optimism that US plans to refill the country’s Strategic Petroleum Reserve after June may bolster the market.
(Bloomberg) — Oil swung between losses and modest gains as concerns that sluggish economic growth will eat into demand were weighed against optimism that US plans to refill the country’s Strategic Petroleum Reserve after June may bolster the market.
West Texas Intermediate traded near $71 a barrel, after dropping by almost 4% over the previous two sessions. The physical market is showing signs of weakness amid poor refining margins and lackluster buying in some areas. The two biggest economies showed further evidence of cooling this week, with US jobless claims rising and China’s recovery waning.
In the Middle East, Iraq’s oil minister said the country told Turkey it wants to restart oil exports from its northern fields via the port of Ceyhan on the Mediterranean on Saturday. Should flows resume, that would return about 450,000 barrels a day to the market.
“Overall market sentiment remains weak,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank AS. “We may have seen a low already, but with sentiment, more than actual supply and demand in control of the price it is difficult to say.”
Crude has retreated by about 15% over the past month as the US economy moved closer to recession and China’s rebound disappointed some market watchers, putting a question mark over energy demand. So far, that’s outweighed the lift from supply cuts announced by the Organization of Petroleum Exporting Countries and its allies.
On Thursday, Energy Secretary Jennifer Granholm told lawmakers the US hopes to start refilling the nation’s strategic reserves after a congressionally-mandated drawdown ends next month. Earlier this week, the administration said it planned to begin purchasing oil for the SPR after finishing maintenance.
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