Oil fluctuated ahead of reports this week that will shed light on supply-demand trends following the surprise OPEC+ production cuts.
(Bloomberg) — Oil fluctuated ahead of reports this week that will shed light on supply-demand trends following the surprise OPEC+ production cuts.
West Texas Intermediate futures dropped below $80 a barrel to the lowest intraday level in a week, reversing an earlier increase. US equity futures also erased previous gains. The market has this week shrugged off concerns over tight oil supply amid persistent recession fears.
Investors will get more insight into the state of the oil market later Tuesday when the US Energy Information Administration releases its short-term outlook. The Organization of Petroleum Exporting Countries and the International Energy Agency are also scheduled to issue monthly reports this week.
Prices have surged and a key spread for benchmark Brent crude has widened since OPEC+ announced its output cuts. The December-December spread — the difference between futures for the final month this year and in 2024 — was at about $5.25 a barrel, from $2.53 three weeks ago.
Russia’s seaborne oil exports collapsed last week, which could tighten markets further. Almost half a million barrels a day of crude supply from Iraq’s semi-autonomous Kurdistan region also remains halted, and there are signs more negotiations will be needed before those flows can resume.
That halt is contributing to UBS Group AG forecasting oil recovering toward $100 a barrel over the next few quarters. Citigroup, on the other hand, sees prices falling below $80 as China’s recovery has been slower than expected, while the prospect of economic slowdowns in the West is crippling demand.
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