Oil’s Rally Takes A Breather As Traders Turn Their Attention To Stockpiles

After ending its longest winning streak in more than four years, OPEC+ leaders extended supply cuts until the end of 2023. As a result, oil fell slightly.

After posting nine consecutive daily gains, the longest run of gains since January 2019, West Texas Intermediate dropped to $87 a barrel. As Saudi Arabia and Russia pledged to extend their export restrictions into the fourth quarter, that surge sent futures into overbought territory.

Later on Thursday, traders will receive an official inventory snapshot from the US. A person who is familiar with the data also stated that crude inventories decreased by 5.5 million barrels last week, according to the American Petroleum Institute, which is funded by the industry. The breakdown also revealed a significant decrease in gasoline stocks and a decrease in oil holdings at the crucial storage hub in Cushing, Oklahoma.

WTI is trading close to its highest level since November 2022, representing a 9 percent increase in prices this year due to oil’s resurgence. Prices have also risen as a result of rising demand prospects, as prominent traders at a conference this week in Singapore expressed optimism regarding China’s consumption outlook.

A Bloomberg gauge of the US currency has reached its highest level since March, indicating that it is on track for an eighth weekly gain. Commodities become more expensive for foreign buyers as a result of the ascent. Copper and other raw materials posted losses on Thursday, which coincided with the modest decline in oil.

With the backwardation expanding in tandem with the gains in futures, the widely followed timespreads in the market continue to indicate tightness. This week, the six-month spread for Brent, the global benchmark, increased to $4.40 a barrel, up from the previous week’s low of $2.54 a barrel.