Oil lost ground amid signs of tepid demand, with a stronger dollar and key technical measures also dampening the commodity’s recent rally.
Some Asian refiners are considering cutting crude processing volumes as profit margins shrink, signaling softer oil demand in the region, while weakness in the global diesel market adds to concerns . A stronger dollar and lingering inflation also weighed on prices, with broader markets waiting to hear speakers from the Federal Reserve this week.
“Concerns about stuttering economic growth and rampant inflation are limiting efforts to push prices higher,” said Tamas Varga, analyst at PVM Oil Associates Ltd. “Breaking above the $90 Brent barrier will be very difficult in the very near future.”
Technicals are also offering headwinds to the commodity, as the four-week recovery has left crude in overbought territory, indicating a near-term correction is possible. The US benchmark failed to break above its 200-day moving average last week and has been trading lower ever since.
“Prices need a breather from the last four-week rally,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities. Futures are mostly in overbought territory, putting traders in “cautious mode” this week.
Oil has recovered from the banking shock that rocked markets in March and sent futures to a 15-month low. Shrinking crude stockpiles at the key US storage hub in Cushing, Oklahoma, and supply disruptions from Iraqi Kurdistan have added to the tightening of global markets.
Prices:
- WTI for May delivery fell $1.69 to settle at $80.83 a barrel in New York.
- Brent for June settlement was down $1.55 to settle at $84.76.
