Oil remained under pressure following a widespread selloff in global financial markets, even as Saudi Arabia and Russia reaffirmed that they will continue output curbs until the end of the year.
(Bloomberg) — Oil remained under pressure following a widespread selloff in global financial markets, even as Saudi Arabia and Russia reaffirmed that they will continue output curbs until the end of the year.
West Texas Intermediate fell near $87 a barrel to the lowest since Sept. 11. Deteriorating sentiment across markets over the last few days, spurred by a higher-for-longer outlook for global interest rates, has stopped a stellar oil price rally in its tracks.
Figures from the ADP Research Institute in collaboration with Stanford Digital Economy Lab showed that US companies added the fewest number of jobs since the start of 2021 in September, suggesting labor demand in several industries is slowing. The 89,000 increase in private payrolls trailed all estimates in a Bloomberg survey.
Oil prices continued to fall Wednesday even as OPEC+ leaders Saudi Arabia and Russia committed once again to continue additional curbs until December.
Oil has rallied since mid-June as the alliance’s supply cuts tightened the market, with inventories sinking and key timespreads indicating greater competition for prompt barrels. Still, the upsurge has run into resistance in recent sessions as investors fret that the Federal Reserve may not be done raising interest rates, with a strengthening in the dollar making commodities more expensive for most buyers. Major gains in US Treasury yields have also hurt raw materials.
“The US dollar index is at year-to-date highs, and judging by the actions and comments of the central banks and their pilgrimage to tame inflation, the world’s marker currency is bedding in a rally that will continue to haunt all markets, including oil,” said John Evans, an analyst at brokerage PVM Oil Associates Ltd. in London.
In the US, meanwhile, the government will release figures on crude inventories against a backdrop of fast-declining holdings, including at the storage hub of Cushing, Oklahoma. Estimates from the industry-funded American Petroleum Institute released Tuesday showed a modest increase at the site last week, but a draw on a nationwide basis, according to people familiar with the figures. A key US pipeline has also seen lower flows this week.
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