Oil heads for weekly loss as China concerns and rate angst flare
BNN Bloomberg
Oil headed for its first weekly loss since June as concerns over economic weakness in China and potentially even tighter monetary policy in the U.S. combined to overshadow signs of a solid physical market.
West Texas Intermediate traded above US$80 a barrel, set for a drop of about three per cent this week as a stream of poor economic data and widening housing crisis in China has weighed on risk assets including oil. That has eclipsed signs of a tighter crude market, with U.S. stockpiles declining to the lowest level since January.
In the U.S., Federal Reserve policymakers have signaled they may not be done hiking rates to tame inflation, helping to lift Treasury yields and aiding the dollar. The U.S. currency is on course for a fifth weekly gain, the longest run in more than a year, which dulls the allure of commodities for overseas buyers.
Canada’s annual inflation rate slowed in February to 1.8 per cent, but many economists believe the new Statistics Canada data may be the dip before a spike driven by oil prices and the war in Iran.
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Canadian and U.S. stock markets gained ground on Wednesday as oil prices fell and tech stocks rose on both sides of the border.
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Daily oil exports from the Middle Eastern Gulf, home to top exporter Saudi Arabia and other major producers, have dropped by at least 60 per cent in the week to March 15 compared to February due to disruptions and output cuts amid the U.S.-Iran war, according to shipping data and Reuters calculations.
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Member countries of the International Energy Agency could release more oil into the market later “as and if needed” after they have already agreed the largest-ever reserve release, Executive Director Fatih Birol said on Monday.
Oil prices are down, and stocks are up Monday, though such moves have been quick to reverse since the war in Iran began.
Statistics Canada says the annual rate of inflation dipped below two per cent in February as the end of last year’s federal “tax holiday” helped take some steam out of the yearly price comparisons.
Middle Eastern sovereign wealth funds and state-backed companies are unlikely to scale back renewable energy investments in Africa despite disruptions from the Iran war, analysts say, given the strong long-term economic and strategic reasons driving such funding.
Crude oil stayed above US$100 a barrel on Monday and Gulf countries reported more attacks by Iran as the war entered its third week, while share prices were mixed.
Representatives from Beijing and Washington began their economic and trade talks in Paris on Sunday, Chinese official news agency Xinhua reported.