(Bloomberg) — Oil held most of a two-day gain that sent benchmark U.S. crude to its highest close since November, as traders weighed signs of a tighter global market and waited for a monthly outlook for OPEC.
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West Texas Intermediate fell to $83 a barrel after rising 4.4% over the previous two days. The gains were driven by another drop in crude inventories at the key storage hub of Cushing, Oklahoma, signs of weaker Russian oil exports and pipeline supply disruptions from Iraqi Kurdistan.
The Organization of the Petroleum Exporting Countries will publish its monthly summary later Thursday, offering a fresh look at market balances through 2023 after the cartel and its allies, including Russia, announced a surprise output cut earlier this year. month. On Wednesday, Fatih Birol, head of the International Energy Agency, said demand was likely to outstrip supply in the second half.
Crude has rallied strongly since hitting a 15-month low in March, with widely watched time frames pointing to a tightening of conditions. The rapid revival in oil has also been supported by signs that US inflation is moderating, which could allow the Federal Reserve to pause its rate-hike campaign.
“Tighter supply concerns continue to take hold after reports of weakening Russian shipments, OPEC production cuts and US inventory drawdowns,” said Charu Chanana, market strategist at Saxo Capital Markets Pte. “Demand-side concerns also eased yesterday, as the US CPI report further noted that May’s rate hike was ‘one-off’, with signs of disinflation continuing to rise.”
The WTI quick spread, the difference between its two closest contracts, pulled back again this month, a bullish pattern. For the global benchmark Brent index, the December-December spread is nearing $6 a barrel in retroaction, up from $4 a barrel a month ago.
Crude’s small drop came despite data from China, the world’s biggest crude importer, pointing to robust demand as it leaves Covid Zero behind. The nation shipped the most oil in nearly three years in March, supported by record Russian flows, according to official figures released Thursday.
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