Oil extended its biggest gain in six weeks as a weaker dollar and expectations for more stimulus in China outweighed concerns over higher interest rates in the US and Europe.
(Bloomberg) — Oil extended its biggest gain in six weeks as a weaker dollar and expectations for more stimulus in China outweighed concerns over higher interest rates in the US and Europe.
West Texas Intermediate edged above $71 a barrel after jumping 3.4% in the previous session, putting it on course for a modest weekly gain.
In a volatile week that saw crude move by more than $2 on three occasions, the market continues to send mixed signals. On the one hand, there’s been a rally in refined fuels, particularly in the US where gasoline’s premium over crude hit an 11-month high. On the other, key timespreads for US crude and the Brent benchmark have traded in a bearish contango structure over recent days, an indication of oversupply.
Those signals have come alongside a slew of macroeconomic influences. China loosened monetary policy this week to revive its stalled recovery, and there are expectations it will announce more targeted stimulus. The dollar is on track for its biggest weekly drop since January, making oil cheaper for most buyers, while the Federal Reserve paused its rate hikes but signaled borrowing costs will keep going higher.
“Its been a pinball week where uncertainty rules,” said PVM Oil Associates analyst Tamas Varga. “Investors nervously react to developments,” whether they be supply-demand estimates, inventory figures, interest-rate decisions or economic data.
To get Bloomberg’s Energy Daily newsletter sent direct to your inbox, click here.
Further clouding the outlook for the market has been a bumper volume of Iranian sales. The country is shipping the most crude in almost five years, according to estimates from a range of analysts.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.