Oil settled little changed after repeated signs of dwindling demand spurred a three-day crash in the commodity.
Saudia Arabia cut the official selling price of its crude for Asian customers for the first time in four months after weak Chinese manufacturing data signaled that demand in the continent remains sluggish. West Texas Intermediate settled below $69, extending a two-week decline, after earlier falling as much as 7.2% at the start of trading in Asia.
“Crude is trading in the vortex of negative sentiment, increased volatility, macro fears and physical market stagnation,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “Overnight volatility underscores the view that crude may not be investable for energy investors at this point and will remain in the clutches of systematic trading strategies.”
The recent plunge — which includes an 11% drop this week — has pushed the commodity into oversold territory on the nine-day relative strength index, suggesting a technical correction may arrive soon.
“It is usually at this point of exasperation that offer best entry points,” Babin added.
Crude has slumped 15% this year, showing that a plan by the Organization of Petroleum Exporting Countries and its allies to regain control of the market by cutting output starting this month isn’t yet working. The losses have been driven by concerns that global growth is slowing, potentially hurting energy demand.
- WTI for June delivery fell 4 cents to settle at $68.56 a barrel in New York.
- Brent for July settlement rose 17 cents to settle at $72.50 a barrel.
Oil has also come under pressure as flows from Russia have proved to be more resilient than expected, despite a vow from Moscow to reduce supplies and a web of Western sanctions imposed after the invasion of Ukraine. Deputy Prime Minister Alexander Novak again affirmed the country’s commitment to follow through on announced output cuts.
Published at Thu, 04 May 2023 12:52:33 -0700