Oil steadied as traders weighed rising US stockpiles and comments by President Joe Biden that the world’s biggest economy will resolve its debt crisis.
West Texas Intermediate futures hovered above $72, after surging by almost 3% on Wednesday, when Biden expressed confidence that negotiators would reach an agreement to avoid a catastrophic default. A gauge of the dollar rose, helping to keep a lid on prices.
Whilst a US debt default “cannot be ruled out, the chances of it are minimal for now,” said Tamas Varga, an analyst at PVM Oil Associates Ltd., in a report.
Oil is still lower for the year as factors including US monetary tightening and uncertainty about China’s economic recovery weigh on the demand outlook. Russia’s crude exports — seemingly unaffected by sanctions related to Moscow’s war in Ukraine — have supported global supplies.
US crude inventories rose by 5 million barrels last week, the biggest gain since February, according to the Energy Information Administration. The picture on key oil products was mixed, with gasoline stockpiles falling further. The four-week average for implied distillates demand dipped to the lowest seasonal level in a decade, except for 2020.
In Asia, refiners in South Korea and Taiwan recently snapped up millions of barrels of US crude, a bullish sign. Meanwhile, India is considering refilling its strategic hoard of crude oil.
“The oil market continues to be driven by external developments, rather than fundamentals,” said Warren Patterson, head of commodities strategy for ING Groep NV. “The market ignored a largely bearish EIA inventory report.”
- WTI for June delivery dipped 0.6 per cent to $72.43 a barrel by 11:15 a.m. in London.
- Brent for July settlement ease 0.5 per cent, to $76.56 a barrel.
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