Oil Holds Above $110 as Tight Supply Balanced by Recession Risk - 05 iulie 2022

West Texas Intermediate traded above $110 a barrel in Asia after a long holiday weekend in the US. The benchmark is more than 1% higher than Friday’s close as there was no settlement on Monday. Key market timespreads remain robust, indicating that there’s solid demand for near-term supplies. 

Citigroup Inc. warned in a note that crude could plunge to $65 a barrel by year-end if a recession hits and demand sinks, although the bank cautioned its economists do not expect the US to dip into that kind of slowdown. The crude market remains in backwardation, a bullish structure marked by near-term prices trading above longer-dated ones. 

Brent’s prompt spread -- the difference between its two nearest contracts -- was above $4 a barrel in backwardation on Tuesday, up from about $2.50 a barrel a month ago. Traders are also tracking China’s efforts to contain renewed Covid-19 outbreaks and enable Asia’s largest economy to reopen fully. That would bolster consumption and offset the drag from slowdowns in the US and Europe. 

In welcome news for Biden, retail gasoline prices in the US have eased from a record above $5 a gallon in mid-June. Pump prices were near $4.80 on Sunday, according to figures from auto club AAA, after dropping for 20 consecutive days in the longest losing run in more than two years.

(US.XON) (US.CVX) (US.SHEL) (US.BP) (FR.TTE)

https://finance.yahoo.com/news/oil-holds-above-110-tight-001513414.html