Oil edged lower, paring a weekly advance, as concerns over the banking industry simmered and the US signaled that refilling the nation’s strategic crude inventories would take longer than previously expected.
(Bloomberg) — Oil edged lower, paring a weekly advance, as concerns over the banking industry simmered and the US signaled that refilling the nation’s strategic crude inventories would take longer than previously expected.
West Texas Intermediate declined below $70 a barrel after a choppy session on Thursday that ended with a drop. Still, the US benchmark has risen by more than 4% this week. Malaise continues to hang over the US banking sector, despite an assurance of more support from the authorities if warranted.
US Energy Secretary Jennifer Granholm said on Thursday that it will be “difficult” to refill government oil reserves this year. The crucial stockpile has been drawn down to the lowest level since the 1980s after the Biden administration ordered a release in the wake of Moscow’s invasion of Ukraine.
Crude is on course for its steepest first-quarter drop since 2020, when the coronavirus pandemic eviscerated global energy demand. The slump has been driven by a potential US recession, robust Russian flows despite Western sanctions, and strikes at refineries in France. The US Federal Reserve hiked interest rates again this week to contain too-hot inflation, although some investors are betting that its tightening campaign is now close to an end.
“In the short term, the oil balance looks quite comfortable and that’s due to Russian supply holding up better than expected,” Warren Patterson, head of commodities strategy for ING Groep NV, told Bloomberg Television on Friday. Still, the global crude market should tighten in the second half as Chinese demand increases, supporting higher prices, he said.
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