Oil slipped along with equities in Europe and a strengthening dollar, while crude continued to trade in a narrow band.
Futures in New York fell below $41 a barrel, a level that’s anchored prices for much of the week, with market volatility now at its lowest level in five months. European stocks declined with U.S. equity futures as investors weighed the prospect of more stimulus against a slew of earnings and the continued spread of the coronavirus.
Despite the lack of volatility, risks cloud the outlook for the coming months. The Federal Reserve sees the U.S. economy on an “extraordinarily uncertain” path, while Royal Dutch Shell plc said it’s currently impossible to predict the direction of oil prices. The market remains caught between output cuts from some of the world’s biggest producers and resurgent waves of coronavirus.
“Positive and negative factors still appear balanced on the oil market, with concerns about weak demand being offset by the voluntary OPEC+ production cuts,” said Eugen Weinberg, head of commodities research at Commerzbank AG.
- West Texas Intermediate for September delivery fell 1.4 per cent to $40.70 a barrel as of 10:37 a.m. London time
- The shape of the WTI futures curve shifted this week, with nearer contracts trading at bigger discounts to later-dated ones, signalling concern about oversupply
Brent for September settlement declined 1.3 per cent to $43.20
With OPEC+ starting to bring supply back to the market, Saudi Arabia is expected to cut its official prices to Asian customers for the first time in four months, according to a Bloomberg survey. Concerns are growing that August could see the oil market tip back into oversupply, with consultant Rystad Energy AS warning of a four-month glut.
© 2020 Bloomberg L.P.