Oil Set for First Quarterly Drop Since 2020 As Macro Mood Sours Sour

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Oil Set for First Quarterly Drop Since 2020 As Macro Mood Sours Sour

Oil Set for First Quarterly Drop Since 2020 As Macro Mood Sours

As escalating fears over a global economic slowdown and a stronger dollar overshadowed the prospect of tightening supply, Bloomberg headed for its first quarterly loss in more than two years.

West Texas Intermediate futures traded near $81 a barrel and are down 24% this quarter. Federal Reserve officials said on Thursday that they will keep hiking interest rates to restrain high inflation, raising concerns about demand. The dollar hit a new record this month, adding to bearish headwinds.

The economic recovery in China continues to be challenged by lockdowns in major cities as well as an ongoing property market downturn. In September, factory activity struggled, while services slowed, according to data released Friday.

According to Ed Moya, senior market analyst at Oanda Corp. Energy traders expect drastic action from OPEC The Organization of Petroleum Exporting Countries and its allies to reduce oil output at their meeting next week, although the size of supply reduction is still under consideration, according to delegates. One of 19 traders and analysts predicted a cutback in the Bloomberg survey.

Oil is poised to make its first weekly gain since the end of August, despite the general bearish sentiment, as escalating tension with Russia and a surprise drop in US crude stockpiles signaled a potential tightening of supply.

The time spreads in US oil futures have been higher. The WTI prompt spread between the two nearest contracts was 81 cents a barrel in backwardation, compared to 49 cents a week earlier.

Hurricane Ian threatened to create a new path of destruction along the Western Coast of the US, as faster wind speeds in the storm mean it is now classified as a Category 1 hurricane. The potential damage in South Carolina will be severe but likely won't rival the devastation in Florida.

Americans are moving to cheaper places where home prices are not as high as in the United States.