Oil posted its first weekly loss since June as low trading volumes left the market vulnerable to macroeconomic concerns, overshadowing signs of a tight physical environment.
West Texas Intermediate settled just above $81 a barrel, down nearly $2 on the week, as poor economic data and a widening housing slump in China weighed on risk assets. The gloom overshadowed signs of a tighter crude market, including US stockpiles falling to their lowest level since January.
Aggregate open interest in West Texas Intermediate fell to its lowest level since January on Thursday.
In the US, Federal Reserve policymakers have signaled they may not have to raise rates to control inflation, helping push up Treasury yields and boost the dollar. Officials will meet next week in Jackson Hole, Wyoming, to give more clues about the Fed’s sentiment.
The U.S. currency posted a fifth weekly gain, the longest stretch in more than a year, dampening the commodity’s appeal to foreign buyers.
Crude remains notably higher from June lows, boosted largely by supply cuts from OPEC+, Saudi Arabia and Russia. This has led many observers, including the International Energy Agency, to forecast tighter balances and higher prices before the year is out. However, Citigroup Inc. and others have countered that oil will weaken as consumption disappoints and supply rises.
“We expect Brent not to break out of the yearly range,” Rabobank analyst Joe DeLaura said in a report, noting that Brent had struggled to break the 2023 highs in recent days. “We see the current macro glut and worsening Chinese economic data to keep that ceiling intact.”
Prices:
- WTI for September delivery rose 1.1% to settle at $81.25 a barrel in New York.
- For the week, futures are 2.3% lower. The September contract expires on Tuesday.
- Brent for October settlement rose 0.8% to $84.80 a barrel.
-With the assistance of Yongchang Chin and Chunzi Xu.
