Oil Expects Three Weekly Losses As Price Cap Stalls and Demand Concerns

Oil headed for three weekly losses as the European Union set a higher-than-expected price cap for Russian crude and fears of an economic slowdown threatened the demand outlook.

Brent crude remains steady below $86 a barrel, with global benchmarks heading down nearly 3% this week. European diplomats continue talks over how tight the ceiling should be, highlighting differences between member states. may be delayed.

Signs of challenge to demand are accumulating. In China, the world’s largest oil importer, daily Covid infections reached a record this week, prompting authorities to tighten controls.

Meanwhile, the Institute of International Finance predicts that the global economy will be as weak next year as it was in 2009 after the financial crisis as the crisis in Ukraine drags on.

Crude oil fell this month, reversing gains achieved in October after the Organization of the Petroleum Exporting Countries and allies agreed to cut production. In a sign of the group’s stance ahead of next month’s meeting, Iraqi Oil Minister Hayan Abdul Ghani signaled that he would back the coalition and adjust its position with Saudi Arabia.

“Crude oil has dealt with bearish factors since the last few trades on the back of recession fears and rising coronavirus infections in China,” said Ravindra Rao, head of commodities research at Kotak Securities. there is,” he said. “If Russian oil prices were capped at $65 to $70, it would not have much of an impact,” he added.

The widely watched differential signals market weakness and the rapid spread of WTI in the contango is a pattern indicative of ample supply in the near term. The gap is 11 cents a barrel compared to 80 cents in the opposite bullish backward structure two weeks ago.

Brent’s immediate spread narrowed to 7 cents a barrel in backwardation, versus $1.78 a month ago.