Bloomberg Oil fluctates as supply squeeze weighs

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Bloomberg Oil fluctates as supply squeeze weighs

After a two-day rally, Bloomberg oil fluctuated as investors weighed the prospect of tightening supply against lingering concerns over slowdown.

West Texas Intermediate futures traded near $82 a barrel after rising 7% over the previous two sessions, including the biggest daily gain since mid-July. A escalating energy conflict with Russia and shrinking US stockpiles raised the possibility of a supply squeeze, which put oil on track for a weekly gain.

The futures are not set for the first quarterly decline in more than two years because of the fears of a possible recession over the market, despite the near-term bullishness. The dollar has spiked this month and is near a new record, making commodities priced in the US currency less attractive to investors.

U.S. crude stockpiles declined last week, while gasoline supplies fell, according to data from the Energy Information Administration on Wednesday. Inventories at the storage hub in Cushing, Oklahoma, increased.

There is mounting speculation that the Organization of Petroleum Exporting Countries and its allies will slash production quotas at its next meeting on October 5. The group must reduce production if it wants to stem the decline in oil prices, according to investment banks UBS Group AG and JPMorgan Chase Co.

The European Union announced a new round of sanctions against Russia that would ban European companies from shipping OPEC's oil to third countries above an internationally set price cap. The energy conflict escalated after natural gas pipelines were damaged in suspected sabotage.

The oil major TotalEnergies SE Chief Executive Officer Patrick Pouyanne said France and Europe's efforts to fill natural gas storages and reduce consumption will allow them to avoid shortages this winter.