Oil slipped as a risk-off tone in markets took the edge away from the biggest monthly advance since early 2022.
(Bloomberg) — Oil slipped as a risk-off tone in markets took the edge away from the biggest monthly advance since early 2022.
West Texas Intermediate dipped near $81 a barrel, hampered by a rising greenback, which weighs on commodities priced in the currency, and softer equities.
“The rally seems to be taking a breather as prices have neared recent highs this year and the dollar has started strengthening again,” said Jens Pedersen, a senior analyst at Danske Bank.
Crude surged last month with gains underpinned by signals that demand is running ahead of supply after OPEC+ reduced output. In addition, as US inflation cools, there’s renewed speculation that the world’s biggest economy can avoid a recession.
A raft of banks including Goldman Sachs Group Inc. suggest consumption is set to rise, with the market swinging into a deficit after a supply glut. BP Plc joined the chorus when it reported annual results Tuesday, with Chief Executive Officer Bernard Looney saying demand for oil has been incredibly resilient of late.
Still, there are reasons to be cautious about a further rally in the short-term. The biggest oil exchange-traded fund posted a record daily outflow recently, as investors take profit from crude’s stellar run. Oil’s recent climb has also left it close to being technically overbought.
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