(Bloomberg) -- Oil held losses as concerns over the near-term demand outlook overshadowed signs of tightening supply heading into winter.
West Texas Intermediate futures traded near $86 a barrel after closing 3.5% lower in the previous session. OPEC cut its forecasts for global demand in the fourth quarter again, while US companies fracked fewer wells than they drilled for the first time in two years, indicating a possible slowdown in production.
China’s economy slowed in October as virus outbreaks hurt consumer sentiment and disrupted business activity. While the government has since eased some of its Covid Zero measures, infections continue to climb across the country.
“Weak China data will only serve to reinforce the view that the country’s oil demand will remain in the doldrums as long as its strict Covid control policies remain in place,” said Vandana Hari, founder of Vanda Insights in Singapore.
Crude has lost about a third of its value since early June as a deepening economic slowdown weighed on demand. Still, the Organization of Petroleum Exporting Countries and its allies have started trimming output and European Union sanctions on Russia will curb flows from December, clouding the supply outlook. Time spreads are also signaling near-term tightness.
The International Energy Agency will provide a snapshot of the market including China later Tuesday.
Meanwhile, Chinese President Xi Jinping and his US counterpart Joe Biden on Monday called for reduced tensions between the world’s two biggest economies during a face-to-face meeting in Bali, Indonesia.
Federal Reserve Vice Chair Lael Brainard said the US central bank could “soon” slow its pace of interest-rate hikes, although she said there’s still “additional work to be done” to bring inflation down, keeping markets on edge. Aggressive monetary tightening from major central banks has also weighed on demand.
(Source : Bloomberg) , all rights reserved by original source.