Oil dipped after climbing to a three-month high as China signaled further measures to bolster economic growth and global crude markets continued to tighten.
(Bloomberg) — Oil dipped after climbing to a three-month high as China signaled further measures to bolster economic growth and global crude markets continued to tighten.
Brent crude futures fell but held above $82 a barrel in London on Tuesday, having gained 4% in the previous three sessions. Top leaders in China, the largest crude importer, indicated more support for the real estate sector alongside pledges to boost consumption, although they eschewed major fiscal or monetary loosening.
“Tighter fundamentals are driving the uptick, but market concerns over demand remain, with China the persistent focus of attention,” said Raad Alkadiri, managing director for energy at consultants Eurasia Group.
Oil has pushed higher this month after the Organization of Petroleum Exporting Countries and allies pared supplies to help drain global inventories. That’s offset the drag from Federal Reserve Chair Jerome Powell’s campaign of monetary tightening, which is expected to continue with another rate hike this week.
US benchmark West Texas Intermediate briefly climbed above $79 a barrel on Monday. Both WTI and Brent closed above their 200-day moving averages on Monday for the first time in nearly a year. If sustained, that may help spur additional buying as it suggests a healthier technical backdrop.
The market’s renewed strength is also manifesting in oil’s key timespreads. The gap between the two nearest contracts for WTI was 34 cents a barrel in backwardation — the highest since November — after briefly dipping into the opposite bearish contango structure last week.
Gasoline is also in focus after Exxon Mobil Corp. shut a unit at one of the largest US refineries, sending US futures to their highest level since October.
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–With assistance from Archie Hunter.
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