Oil was set for a slight weekly decline as demand concerns dominate market sentiment even after Saudi Arabia’s unilateral pledge to cut production.
(Bloomberg) — Oil was set for a slight weekly decline as demand concerns dominate market sentiment even after Saudi Arabia’s unilateral pledge to cut production.
West Texas Intermediate hovered above $71 a barrel, paring this week’s decline to less than 1% after a week of wild gyrations set off by dueling international headlines. Riyadh’s surprise decision to cut output by about 1 million barrels a day last weekend, which caused a short-lived rally earlier this week, has receded behind a worsening outlook for consumption.
Oil briefly fell below $70, shedding almost 5% in less than an hour, on reports in Middle Eastern media — quickly disavowed by government officials — that the US and Iran were making progress on nuclear talks that would eventually pave the way for additional exports. While prices largely recovered, traders say the stampede reflects the market’s willingness to sell.
“We have been continuously selling for about six months to nine months,” said Jeff Currie, head of commodities research at Goldman Sachs Group Inc. said in a Bloomberg Television interview.
The US oil benchmark has fallen about 14% from a mid-April peak on signs that China’s recovery is stalling and the US will need to keep raising interest rates to rein in inflation. Also, Russia’s crude exports have been more resilient than anticipated, adding to supply.
Oil consumption in Asia’s biggest economy has stagnated at the same time processors have idled facilities for spring maintenance. China’s onshore crude stockpiles reached a two-year high in May as demand fell short of expectations.
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