Oil extended its longest run of losses this year ahead of the release of Federal Reserve minutes that may provide clues on the path ahead for monetary tightening in the US.
(Bloomberg) — Oil extended its longest run of losses this year ahead of the release of Federal Reserve minutes that may provide clues on the path ahead for monetary tightening in the US.
The prospect of more aggressive interest-rate hikes to quell inflation has kept a lid on crude prices despite increasing evidence of a robust recovery in Chinese demand following the end of Covid Zero rules. West Texas Intermediate traded below $75 a barrel, declining for the sixth straight session.
“Crude remains trapped in a choppy trading pattern, with rising interest rates, and thoughts of a slowing economy keeping downside pressure,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities.
Oil’s lackluster start to the year has defied early optimism that China’s resurgence would buoy prices. Morgan Stanley on Wednesday became the latest bank to trim price forecasts, projecting that the market will be oversupplied in the first quarter and balanced in the second quarter, before edging into a deficit in the second half.
In the Brent market, the nearest timespread fell sharply on Wednesday. That’s a tentative sign of a softer market, though traders often pare back positions in the days before expiry, which is due next week.
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