Oil Inches Up After Longest Weekly Drop in Five Years

by Bloomberg | Julia Fanzeres and Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas

Oil held steady in a lukewarm session after concerns that supplies are overtaking demand triggered the longest weekly losing streak in five years.

West Texas Intermediate settled little changed near $71 a barrel as investors waited for the next big signal on demand and supply. Oil futures had slid for seven weeks in a row amid signs of swelling supplies, with the latest production cuts announced by the OPEC+ alliance failing to halt the slide. 

“The potential for further short-term weakness is there,” said Fawad Razaqzada, a market analyst at City Index and Forex.com. While the most severe phase of the market decline is in the past, “we must see a clearer reversal pattern before turning tactically bullish on oil again.”

Spreads between monthly contracts, a critical barometer for supply and demand, continue to indicate weakness in the oil market. Three-month spreads for both Brent and West Texas Intermediate are showing a discount for barrels for nearer-term settlement versus those further in the future, a bearish structure known as contango.

Traders will be monitoring reports on market fundamentals from the International Energy Agency, the Organization of Petroleum Exporting Countries and the US Energy Department later this week, as well as the Federal Reserve’s final rate decision of the year. A forecast that the year-end travel season will be the busiest in the US since 2000 is partially brightening the outlook for demand.

Oil has dropped by more than a fifth since late September as output surges in the US and other key producers, while forecasters predict slower Chinese demand growth and see lingering risks of a US recession. 

At the same time, production cuts from Saudi Arabia and Russia, and pledges to prolong them if necessary, have failed to stem the slide. Citigroup Inc. said OPEC+ will need to extend the measures through next year just to keep prices in a $70 to $80 range.

Consumers, including airlines and utilities, have taken advantage of the recent rout to lock in cheaper barrels. A flurry of call spreads traded in Brent, which limits the impact to buyers of a rebound in crude prices.

Prices:

• WTI for January delivery inched up 9 cents to settle at $71.32 a barrel in New York.
• Brent for February settlement climbed 19 cents to settle at $76.03 a barrel.

by Bloomberg | Julia Fanzeres and Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas