Oil fluctuates near $83 with U.S. supplies under the microscope

Oil swung between gains and losses as traders weigh the ongoing impact of a global energy crunch and dwindling inventories at a key U.S. storage hub.

Front-month futures in New York traded below $83, paring an earlier drop as the dollar cooled. While headline prices have been volatile over the last two sessions, the market’s structure has surged with the energy crisis leading to crude stockpiles at the key U.S. storage of Cushing rapidly draining to near critically low levels.

West Texas Intermediate lost seven cents to US$82.57/bbl at 9:29 a.m. in London. Brent for December settlement slid 0.1 per cent to $84.71.

Oil rallied to the highest level since 2014 this week as the energy crunch — prompted by coal and natural gas shortages — coincided with an economic recovery from the pandemic. U.S. President Joe Biden, meanwhile, said that Americans should expect high gasoline prices to continue into next year because OPEC is withholding supply. The White House has been communicating with the group over the past few months, pushing the cartel to boost crude production.

“The near-term oil price outlook remains constructive,” said Stephen Brennock, an analyst at PVM Oil Associate. “A widening supply deficit will continue to keep upward pressure on crude prices in the year-end period.”

© 2021 Bloomberg L.P.

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