- Brent futures once again touch lowest level since March
- Key derivatives are pointing to a looser physical market
Oil fell to the lowest level since mid-March, with a mildly bearish US stockpile report adding to signals that the decline has further to go.
Brent fell toward $82 a barrel, while West Texas Intermediate traded near $77. Crude stockpiles at Cushing rose by more than 1 million barrels last week, based on an industry estimate, according to people familiar with the figures. The breakdown also showed higher nationwide holdings of gasoline and distillates. Official data come later Wednesday.
The supply growth added to a signs of a market that has turned markedly softer in recent days. Weekly derivatives contracts in the key North Sea market are trading in a structure that signals oversupply for the first time since March. Timespreads, which act as another gauge of market health, have also softened.
Oil has been on a downtrend since early April, posting losses in three of the past four weeks, with weakness not just in timespreads but to processing margins too. That decline has come as much of the geopolitical premium from tensions in the Middle East has unwound, bringing traders’ focus back to a cooling market.
“Oil market indicators have turned softer in recent weeks, and prices have declined from recent peaks,” Morgan Stanley analysts including Martijn Rats and Charlotte Firkins wrote in a note. “The oil market is not tight now, but we see seasonal strength ahead in coming months.”
A stronger dollar is an added headwind as the commodity becomes more expensive for many investors. The US currency headed fora third day of gains, according to a Bloomberg gauge, while oil’s breach below its 100-day moving average is also exacerbating the latest bout of price weakness.
The Organization of the Petroleum Exporting Countries is due to meet next month to assess supply policy after implementing production cuts over the first half of the year to support prices. Most traders expect that the curbs will be extended, possibly to the year-end, according to a Bloomberg survey.
In the Middle East, Israel’s military edged into the Gazan city of Rafah, with a truce between the Jewish state and Hamas — designated a terrorist organization by the US and the European Union — still remaining elusive.
source: bloomberg
https://www.bloomberg.com/news/articles/2024-05-07/latest-oil-market-news-and-analysis-for-may-8?leadSource=uverify%20wall
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