You can't remove Russian barrels without causing energy market ripples: Robert Yawger
Oil rose in a volatile session as broader market rally overtook earlier concerns over China’s COVID Zero policy weighing on their demand outlook.
West Texas Intermediate settled above US$86 a barrel after a choppy session in which futures traded in a US$3 range. Dour sentiment over China’s commitment to its COVID Zero policy vied with optimism that slower-than-expected inflation means the Federal Reserve may be able to temper aggressive rate hikes.
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Despite weakness earlier in the session, oil traders were unable to withstand risk-on appetite that sent U.S. stocks spiking by the most in two years.
“Oil was starting too look heavy as China continues to struggle with COVID but that is being offset by optimism that the U.S. economy might be able to avoid a recession,” said Ed Moya, senior market analyst at Oanda Corp.
After Brent crude rallied toward US$100 earlier this week, prices have pulled back on concerns about the demand outlook.
Still, futures have regained some ground this quarter after the Organization of Petroleum Exporting Countries and its allies agreed to reduce supply. The market now faces several major catalysts in the coming weeks -- an OPEC+ meeting and the start of sanctions on Russian oil flows in December, along with a Federal Reserve policy decision in the middle of next month.
- West Texas Intermediate added 64 cents to settle at US$86.47 in New York.
- Brent futures rose US$1.02 to settle at US$93.67 barrel.