Oil declined, but was heading for one of its smallest weekly trading ranges in years, as forecasts for a surplus counter signals of market tightness in the near-term.

Brent slid below US$83 a barrel and the global benchmark has traded in a $2.30 band this week, the narrowest since early 2021. Timespreads are indicating a more robust market, and US crude inventories expanded less than forecast, but many analysts still expect a surplus this year.

Oil has been caught between the bullish tailwinds of lower OPEC+ output and rising Middle East tensions, and fears about the outlook for consumption in top importer China. The International Energy Agency said earlier this month that the global oil market could remain in surplus all year.

“Strong-enough oil demand juxtaposed with weak Chinese macroeconomic data has been a recurring theme,” Michael Tran, an analyst at RBC Capital Markets LLC, said in a note. “So far, fundamental signals have been a mixed bag.”

Attacks on commercial shipping in the Red Sea by Houthi militants have added to the risk premium for oil futures. The group and their Iranian backers are preparing for a lengthy confrontation with the US and its allies around the waterway — regardless of how the Israel-Hamas war plays out.

While U.S. crude stockpiles rose less than expected last week, they were still up for a fourth week. Inventories at Cushing, Oklahoma, the delivery point for West Texas Intermediate futures, also climbed, but remain below seasonal averages.

Prices:

• Brent for April settlement fell 1.6 per cent to $82.34 a barrel at 2:10 p.m. in London
• WTI for April delivery dipped 1.7 per cent to $77.26 a barrel