Surge Over, Time to Fall? Oil Faces Two Big Threats at Once!
Oil fell after its biggest gain in nearly two weeks, with traders eyeing an OPEC+ meeting later this week and U.S. jobs data that will provide clues about the health of the world’s largest economy.
Brent traded near $68 a barrel, reversing a surge of about 3% on Wednesday. Thursday’s payrolls report is expected to show a slowdown in hiring against the backdrop of President Donald Trump’s trade war.
Wednesday’s rally came against a backdrop of market strength. Diesel premiums to crude in the U.S. were the largest in 15 months after fuel stocks continued to fall. Spreads on nearby crude contracts also pointed to tight supplies, with stocks at the key storage hub of Cushing, Oklahoma, falling. Crude has been volatile in recent weeks, surging and falling as geopolitical risks in the Middle East are felt, although volatility and volumes have eased in recent days before a U.S. holiday on Friday.
Signs of weakness in the U.S. economy would bode ill for crude demand at a time when OPEC and its allies are rapidly ramping up production, adding to market concerns about a supply glut later this year. “We believe we are on the verge of a more severe structural weakness over the next few months,” said Helge Andre Martinsen, senior energy analyst at DNB Bank ASA, led by seasonal and structural slowdowns in oil demand growth and OPEC+ continuing its large production increases. In Canada, wildfires erupted in the Fort McMurray area, close to major oil sands production sites, offering a fresh reminder of the threat to the country’s supply from wildfires.
Source: (ayu-newsmaker)
