Oil fell as traders focused on crude supply balances while considering the potential for higher interest rates after inflation accelerated last month.
(Bloomberg) — Oil fell as traders focused on crude supply balances while considering the potential for higher interest rates after inflation accelerated last month.
West Texas Intermediate fell as much as 3.2% as crude traders contend with a well-supplied market amid continuing economic certainty. The Organization of Petroleum Export Countries said it sees a modest surplus next quarter during a seasonal lull in demand.
“There is limited appetite to add significant exposure at present until oil inventory data provides a more positive environment, i.e. oil inventories falling,” said Giovanni Staunovo, strategist at UBS.
Crude has had a bumpy year so far as traders juggle concerns over a global economic slowdown and optimism around China’s long-awaited demand rebound. Inflation accelerated last month, raising the question as to whether the Federal Reserve would feel pressure to raise rates at its meeting next week despite ongoing financial turmoil. Meanwhile, crude supplies are expected to remain in surplus until demand takes off. The International Energy Agency releases its snapshot on the outlook for supply and demand on Wednesday.
Traders will be watching price action to see if the flat price is supported at recent lows.
“If buyers don’t show up soon and support oil at $70, we can see an air pocket lower to $62,” said Jc O’Hara, the chief technical strategist at Roth Mkm.
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