Oil / Commodities - Oil headed for a modest weekly gain as optimism about the outlook for demand eclipsed concerns about tighter monetary policy and an economic slowdown that have combined to roil wider financial markets. WTI eased below $111 a barrel after ending higher Thursday, and is up 0.3% so far this week. It is on course for a fourth consecutive weekly gain that would be the best run since mid-February. Global fuel product markets are tightening, especially in the U.S., where gasoline and diesel prices have risen to unprecedented levels in the run-up to summer driving season. Nationwide travel is expected to approach levels seen before the pandemic. Oil has surged almost 50% this year as demand recovered from the impact of the pandemic and Russia’s invasion of Ukraine sent shock waves through global markets. While the U.S. and U.K. have announced bans on Russian exports, flows to Asia have picked up. China is seeking to replenish strategic stockpiles with cheap Russian oil even as officials grapple to suppress COVID outbreaks. With an easing of virus outbreaks in China, and peak-demand season in the U.S., risks are skewed to the upside. Oil’s jump has contributed to the fastest inflation in decades, prompting the U.S. Federal Reserve to vow that it will go on raising interest rates until there are clear signs that price pressures are easing. That has spurred wild shifts in investors’ appetite for risk, swinging equity, bond and commodity markets. Oil markets remain in backwardation, with Brent’s prompt spread at $2.33 a barrel in backwardation compared to $1.80 a week ago.
Newsletter - May 20, 2022
Newsletter - May 20, 2022
Newsletter - May 20, 2022
Oil / Commodities - Oil headed for a modest weekly gain as optimism about the outlook for demand eclipsed concerns about tighter monetary policy and an economic slowdown that have combined to roil wider financial markets. WTI eased below $111 a barrel after ending higher Thursday, and is up 0.3% so far this week. It is on course for a fourth consecutive weekly gain that would be the best run since mid-February. Global fuel product markets are tightening, especially in the U.S., where gasoline and diesel prices have risen to unprecedented levels in the run-up to summer driving season. Nationwide travel is expected to approach levels seen before the pandemic. Oil has surged almost 50% this year as demand recovered from the impact of the pandemic and Russia’s invasion of Ukraine sent shock waves through global markets. While the U.S. and U.K. have announced bans on Russian exports, flows to Asia have picked up. China is seeking to replenish strategic stockpiles with cheap Russian oil even as officials grapple to suppress COVID outbreaks. With an easing of virus outbreaks in China, and peak-demand season in the U.S., risks are skewed to the upside. Oil’s jump has contributed to the fastest inflation in decades, prompting the U.S. Federal Reserve to vow that it will go on raising interest rates until there are clear signs that price pressures are easing. That has spurred wild shifts in investors’ appetite for risk, swinging equity, bond and commodity markets. Oil markets remain in backwardation, with Brent’s prompt spread at $2.33 a barrel in backwardation compared to $1.80 a week ago.