Oil extended its decline to a three-month low as traders weighed signs of an economic rebound in China against the outlook for weaker demand amid US banking sector turmoil.
(Bloomberg) — Oil extended its decline to a three-month low as traders weighed signs of an economic rebound in China against the outlook for weaker demand amid US banking sector turmoil.
Brent crude futures erased early gains after data that showed stronger Chinese consumer spending, industrial output and investment after coronavirus restrictions were dropped. The International Energy Agency’s monthly Oil Market Report struck a more bearish tone, forecasting that world oil supply should “comfortably” exceed demand in the first half before tightening later this year.
The market is also facing another interest-rate hike from the Federal Reserve next week after US inflation gained, despite the impact on the financial industry from the collapse of Silicon Valley Bank.
“Looking forward, we’re expecting a sharp recovery in oil demand this year,” Toril Bosoni, the IEA’s head of oil industry and markets division, said on Bloomberg TV. “We could very quickly see the market shifting back to deficits as the year progresses.”
Oil has endured a bumpy year, whipsawed by aggressive monetary tightening from the Fed and optimism around China’s demand recovery. In France, strike action continues, while Russia’s energy ministry expects oil production to fall this year, Interfax reported, citing Minister Nikolai Shulginov in State Duma.
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