US oil futures headed for the longest run of monthly losses in more than eight years as slowdown concerns in the US and Asia weighed on demand outlook.
(Bloomberg) — US oil futures headed for the longest run of monthly losses in more than eight years as slowdown concerns in the US and Asia weighed on demand outlook.
West Texas Intermediate for June was little changed on Friday morning London time, putting prices on course for a sixth straight monthly retreat, the worst run since 2015.
Investors see US inflation continuing to accelerate, bolstering expectations the Federal Reserve will be forced to keep raising rates and heightening the chances of a a demand-sapping recession. The International Monetary Fund warned the European Central Bank to tread carefully on the path to more rate hikes.
Falling profit margins for refiners in Asia are already flashing weakness in the biggest oil-importing region, but China’s recovery is starting to take hold. Top processor Sinopec said the nation’s rebound will boost demand growth for refined oil products by more than 10% this year.
Crude has been whipsawed in April, rising sharply after the Organization of Petroleum Exporting Countries and its allies announced an output cut, but then giving up those gains as the outlook deteriorated. Supply from Russia has remained resilient despite Group of Seven sanctions, and China’s rebound has been slower than some anticipated.
“The market seems a bit more concerned about the outlook for demand ahead of next week’s big European Central Bank and Fed meetings where rates are going to be hiked again,” said Jens Pedersen, director of oil and commodities research at Danske Bank. While it’s “probably too early for another surprise output cut” by OPEC+, speculation could start to build in that direction before the group’s next meeting, he said.
Traders will be on the lookout for first-quarter earnings from oil majors including Exxon Mobil Corp. and Chevron Corp. — due later Friday — which could offer insights into their outlook for the global market.
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