Oil futures: Crude rebounds from steep losses amid conflicting signals
Quantum Commodity Intelligence - Crude oil futures late Thursday were little changed on the day following another choppy session, initially extending the week's losses with markets again coming under heavy selling pressure on concerns over an economic slowdown, along with further rate hikes stalling growth.
Front-month September ICE Brent futures were trading at $99.60/barrel (1940 GMT), compared to Wednesday's settle of $99.57/b, having rebounded from an intraday low of $94.50/b.
At the same time, August NYMEX WTI was trading $96.27/b, versus the day's low of $90.56/b and Wednesday's settle of $96.30/b.
Both markets traded at levels not seen since prior to Russia's invasion of Ukraine, before rebounding strongly in the latter part of the session.
The latest blow for energy bulls came as US inflation figures rocketed 9.1% in June, the highest in 40 years and raising the prospect of further near-term interest rate hikes and a dent to economic growth prospects.
The dollar index raced to fresh multi-decade highs, valued above 109 points at one point Thursday before retreating, further pressurizing dollar-denominated oil markets.
The market is wrestling with "short-term downward risks due to recession fears, versus the longer-term issues with under investments. The recession fears will keep the lid on prices for the moment," said Hans Van Cleef, senior energy economist at ABN Amro.
The latest data from the US Energy Information Administration revealed US deliveries of all major products fell sharply last week due to the US Independence Day celebrations and high prices impacting demand.
Gasoline deliveries in the week to 8 July fell to their lowest level since New Year's Eve, leaving total stocks at a two-month high despite lower gasoline production.
The figures unveil the elasticity of gasoline demand, which has fallen almost 15% (1.35 million bpd) on the week to 8.06 million barrels, albeit distorted by pre-holiday buying.
In response, European gasoline prices fell to the lowest level in 10 weeks on Wednesday. E5 Eurobob barges were assessed by Quantum at $1,062.75/mt at 1630 London time, $26/mt above front month swaps, but down from +$70/mt just a week ago.
However, most analysts still see physical oil fundamentals as balanced-to-tight, noting markets remain in relatively steep backwardation with firm premiums for spot crude.
"A wrath of economic data, monthly oil reports, and President Biden's trip to the Mideast will weigh on oil prices, but none of this will change how tight the oil market remains right now," said Ed Moya, senior market analyst at brokerage Oanda, summing up the week's declines.
