Oil settled around $71 a barrel after four weeks of losses, even as negotiations over the US debt ceiling injected risk-on sentiment into broader markets that is slowing the recovery from relief of crude
West Texas Intermediate is finding support at a psychological level of $70, but gains have been dampened by a stronger dollar and falling stocks amid growing concerns that the US could default on its debt. Traders are also looking for new data to clarify the trajectory of the economy.
“Oil is playing tug-of-war with a tight market and rising economic uncertainty as debt ceiling talks will likely cause some market tension,” said Ed Moya, analyst Oanda market senior. “This week, energy traders will be paying close attention to the retail sales report to see if the consumer remains in decent shape.”
Oil has fallen nearly $10 a barrel this year on fears of a global recession and slower-than-expected demand from China. The OPEC+ production cut of more than 1 million barrels per day has not materialized, and prices are trading at pre-announcement levels. Adding to the bearish picture, demand for physical barrels appears weak, while refinery margins, the profit refiners make from processing crude oil into petroleum products such as diesel and gasoline, remain low.
Still, China’s transportation data is starting to show an increase in car use, while air travel from the country is on a prolonged upswing.
Prices:
- WTI for June delivery rose $1.07 to settle at $71.11 a barrel in New York.
- Brent for July settlement rose $1.06 to $75.23 a barrel.
– With the assistance of Natalia Kniazhevich and Sri Taylor.
