Don't think oil demand will fall off cliff: TD commodites head
Oil steadied after climbing to a three-month high as China signaled further measures to bolster economic growth and global crude markets continued to tighten.
Brent crude futures held above US$82 a barrel in London on Tuesday, having gained four per cent in the previous three sessions. Top leaders in China, the largest crude importer, indicated more support for the real estate sector alongside pledges to boost consumption, although they eschewed major fiscal or monetary loosening.
“Tighter fundamentals are driving the uptick, but market concerns over demand remain, with China the persistent focus of attention,” said Raad Alkadiri, managing director for energy at consultants Eurasia Group.
Oil has pushed higher this month after the Organization of Petroleum Exporting Countries and allies pared supplies to help drain global inventories. That's offset the drag from Federal Reserve Chair Jerome Powell's campaign of monetary tightening, which is expected to continue with another rate hike this week.
U.S. benchmark West Texas Intermediate briefly climbed above US$79 a barrel on Monday. Both WTI and Brent closed above their 200-day moving averages on Monday for the first time in nearly a year. If sustained, that may help spur additional buying as it suggests a healthier technical backdrop.
The market's renewed strength is also manifesting in oil's key timespreads. The gap between the two nearest contracts for WTI was 35 cents a barrel in backwardation — the highest since November — after briefly dipping into the opposite bearish contango structure last week.
Gasoline is also in focus after Exxon Mobil Corp. shut a unit at one of the largest U.S. refineries, sending U.S. futures to their highest level since October.
- WTI for September delivery slipped 0.3 per cent to US$78.48 a barrel at 9:54 a.m. in London.
- Intraday prices touched US$79.28 on Tuesday, the highest since April 19.
- Brent for September settlement was 0.4 per cent lower at US$82.44 a barrel.
- It hit US$83.16 on Tuesday, the highest since April 18.