Analysts say oil prices, down more than 22% in the third quarter, they could be bottoming out as Chinese demand shows signs of recovery and US sales of strategic reserves come to an end.
“I think we’re bottoming out, but it’s going to continue to be exceptionally volatile and it’s going to continue to keep hot money out of this market.” said Rebecca Babin, senior energy trader at CIBC Private Wealth US.
US inventory figures showed that consumer demand picked up, although the supply of refined products remained 3% lower in the last four weeks than in the same period a year ago.
Crude stocks in the United States fell 215,000 barrels in the last week, while gasoline inventories decreased by 2.4 million barrels and distillate inventories by 2.9 million barrels, as refining activity slowed after several interruptions.
Refining is down, but facilities are still running at 90.6% of total capacity in the United States, the highest for this time of year since 2014, both for domestic demand and for exports.
The dollar hit a new two-decade high against a basket of currencies on Wednesday before retreating. A strong dollar reduces demand for oil by making it more expensive for buyers using other currencies.
“These are all dollar-driven rallies across the board,” said Eli Tesfaye, senior market strategist at RJO Futures. “All commodity-dominated currencies are up: Crude is not moving in isolation here.”
Goldman Sachs on Tuesday cut its oil price forecast for 2023, on expectations of weaker demand and a stronger US dollar, but said global supply disappointments only reinforced his long-term bullish outlook.
Source: Ambito
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