After a three day slump, major US banks warned of a tough outlook for 2023, which caused concern for demand and decreased appetite for risk assets.
West Texas Intermediate held above $74 a barrel after futures fell almost 9% over the previous three sessions despite optimism surrounding China's move to loosen strict virus curbs. According to Goldman Sachs Group Inc. Chief Executive Officer David Solomon, he said he saw bumpy times ahead. Crude is lagging into the end of the year, with the US benchmark heading for the first back-to-back quarterly drop since mid-2019. The latest leg down comes at a complex moment with traders assessing the fall-out of the Group of Seven curbs on Russian oil, including a price cap that was meant to punish Moscow for the war in Ukraine. The slump comes against a backdrop of dwindling liquidity in the oil market, with declining interest stoking volatility.
Russia is considering setting a price floor for its international oil sales due to the cap, which has been set at $60 a barrel. Moscow can either impose a fixed price for the nation's barrels or stipulate maximum discounts to international benchmarks at which they can be sold.
Time spreads are signaling ample near-term crude supplies, with the three month spread for global benchmark Brent falling further into contango when later-dated futures trade at a premium to prompt contracts. The gap was last at 53 cents a barrel in contango, compared with $4 a barrel in the opposite side of the backward structure a month ago.
The American Petroleum Institute, according to people familiar with the figures, reported that US stockpiles decreased by more than 6 million barrels last week. The inventories data is expected to be released later Wednesday.
None of Twitter Under Elon Musk Still Has to Live in Apple's World