Oil edged higher as the easing of some virus curbs in a major Chinese city and a pause in the dollar’s rally aided the demand outlook.
(Bloomberg) — Oil edged higher as the easing of some virus curbs in a major Chinese city and a pause in the dollar’s rally aided the demand outlook.
West Texas Intermediate rose toward $89 a barrel, extending the previous day’s gain after a volatile session amid a deluge of conflicting signals. Chengdu said it had controlled the spread of Covid-19 and would start easing lockdown measures in parts of the city from noon Thursday.
The US Department of Energy, meanwhile, said that a plan to restock the nation’s emergency oil supply doesn’t include a trigger price, and that such purchases aren’t likely to occur until after fiscal 2023. Bloomberg News reported Tuesday that administration officials have discussed refilling the Strategic Petroleum Reserve, or SPR, when crude prices dip below $80 a barrel.
Oil is on course for the first quarterly decline in more than two years as central banks including the Federal Reserve tighten monetary policy to tame inflation, hurting the outlook for energy consumption. The retreat has erased all the gains seen in the wake of Russia’s invasion of Ukraine, with prices hitting the lowest level since January earlier this month.
Traders were also tracking a looming rail strike in the US, which has the potential to cause widespread disruption to commodity markets. A shutdown threatens to boost gasoline prices, according to American Fuel & Petrochemical Manufacturers, a trade association. Gasoline futures rose for a sixth day.
While a hawkish Fed has helped lift the dollar to an all-time high, the US currency was slightly lower early on Thursday. That makes commodities priced in the greenback cheaper for overseas buyers.
Crude’s gain on Wednesday came despite a slew of negative signals. The International Energy Agency said that China faces its biggest annual drop in oil demand in more than three decades on Covid-19 lockdowns and a property crisis. In addition, official US figures showed a rise in commercial stockpiles, while one measure of fuel demand sank below 2020 levels.
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