Oil’s rally soared amid a summer liquidity slump, leaving the commodity at the mercy of broader, more volatile markets.
While signs of tightening physical supplies in recent weeks had pushed crude oil futures to their longest winning streak in a year, West Texas Intermediate on Monday balanced Wall Street on renewed concerns about the U.S. economy. the china Open interest in US crude oil is near its lowest levels this year as investors travel for the summer.
“Crude oil prices are softer as the dollar rebounds and concerns weigh in with China’s real estate sector, which will be a drag on global growth conditions,” said Ed Moya, senior analyst at Oanda market. “The market is somewhat illiquid here, which means if the bond market sell-off intensifies, we could see strong dollar strength weighing on crude oil prices,” he added.
Expectations that progress in Iran-US relations will lead to more oil exports from the Middle Eastern country also dampened sentiment.
Physical markets have been strong thanks to OPEC+ supply constraints and better-than-expected demand holding up, helping oil rise 25% from June lows. The fast spread on US crude, a reflection of supply and demand at the benchmark futures delivery point in Cushing, Oklahoma, is nearing its strongest levels since November.
A snapshot of conditions in China will arrive on Tuesday with data on industrial production, including the refining industry. The country, the largest buyer of crude oil in the world, has been opening new plants, increasing import demand.
Prices:
- WTI for September delivery was down 0.82% at $82.51 a barrel at 1:30 p.m. in New York.
- Brent for October settlement was down 0.6% at $86.21 a barrel.
-With the assistance of Yongchang Chin, Alex Longley and Chunzi Xu.
