Americas News
Oil Ekes Out Minuscule Gains As Rudderless Traders Concede That Demand Remains Robust
Fickle oil traders spent Thursday vacillating between worrying about demand and responding to news that demand was in fact okay, and in the end caused the commodity to settle slightly upward – however, further trading volatility in the near future seems assured.
Brent settled up 15 cents to $83.36 per barrel, while West Texas Intermediate settled up 16 cents to $79.05 per barrel.
The positive settlement was said to be influenced by Insights Global data showing that gasoil stocks in storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub declined by 3 percent in the latest week, in addition to falling refined stocks in Europe and a drop in the 2-year U.S. treasury yields.
But Giovanni Staunovo, analyst at UBS, warned that volatility is likely to persist until investors get clarity on the U.S. Federal Reserve's next moves.
Craig Erlam, analyst at OANDA, added, "The U.S. [economy] is still in a strong position, but there are areas of weakness and if interest rates are going to stay higher for longer, further cracks could appear."
Volatility could be further exacerbated now that Washington is in talks with Venezuela to explore a temporary lifting of sanctions that have hindered its crude sales; a spokesperson for the White House's National Security Council said, "Should Venezuela take concrete actions toward restoring democracy, leading to free and fair elections, we are prepared to provide corresponding sanctions relief."
Another development sure to contribute to erratic oil trading in the near future: India's oil demand growth is reportedly shrinking, from 415,000 barrels per day (bpd) posted in 2021/22 as economies rebounded from the government-imposed Covid lockdowns, to 255,000 bpd during the first seven months of this year.
John Kemp, market analyst for Reuters, said this will act as a drag on oil prices; by contrast, Standard Chartered maintained that oil fundamentals will remain strong.
But despite the bearish and bullish swings in trading sentiment that has kept and will likely continue to keep oil range bound, physical markets continue to remain tight thanks to curbs from the Organization of the Petroleum Exporting Countries (OPEC) driving a sharp drop in global inventories over the past month, according to data from Kpler.
