Bloomberg News reports that oil has been steady after an industry report signaled yet another draw in the segment of crude inventories in the US. This has added to the tightening supply outlook after Saudi Arabia implies probable cuts to production.
It was found that West Texas International was trading close to $93 per barrel after surging almost 4% in the last session. The American Petroleum Institute reported that crude stockpiles slid by 5.63 million barrels in the past week, as per people familiar with the matter. This was followed by the news that exports hailing from Kazakhstan may come to a standstill for many months.
However, the market has been holding up even after a series of data that indicates a bearish position. Economic activity has become weak across many nations ranging from the United States to the European continent and Asia, further leading to concerns that escalating costs and the Ukraine war will push the world into recession. A strong dollar added to headwinds for commodities as well.
Oil Trended Lower amidst Volatility
The potential revival of a nuclear deal with Iran that might lead to an increase in exports from the producer OPEC is also weighing on the market of late. There was a demand from a senior House Republican that the US Congress must be allowed to review any agreement as Western powers and Tehran are inching towards an accord.
Bloomberg News reports that oil has lost a quarter of its value since the beginning of June related to concerns over a slowdown in the economy. As stated by the Oil Minister of Saudi Arabia, Prince Abdulaziz bin Salman this week, there is an increasing disconnection of the futures market from the fundamentals, and the OPEDC + alliance might be compelled to reduce output.
The difference between the prompt Brent Futures and the second-month contract widened on Tuesday after news of disruptions in Kazakh exports. The spread was found to rise to $1.05 per barrel in the backwardation a day before from 67 cents, which can be regarded as a bullish signal that implies supply tightness. On Wednesday, it was 94 cents.
Official figures are expected to be released by the Energy Information Administration on US demand and later stockpiles on Wednesday. The API also reports that fuel inventories and supplies at Cushing, Oklahoma, the key storage hub escalated.
