Oil edges higher as tightening market vies with slowdown fears

OIL edged higher as investors weighed signs of a tight market against lingering concerns over a global economic slowdown.

West Texas Intermediate traded near US$85 a barrel in early Asian trading on Monday (Oct 24). Time spreads are signalling a tightening market ahead of significant production cuts from Opec+ and European Union sanctions on Russian seaborne crude flows. That’s raised concerns over supply heading into winter.

Oil is still facing headwinds from a stronger dollar and fears that a slowdown will sap energy demand. Crude has lost about a third of its value since early June, erasing all of the gains made after Russia’s invasion of Ukraine.

The decision by the Organization of the Petroleum Exporting Countries and its allies to curb supply from November has drawn a sharp rebuke from the US, which previously called on producers for more oil to help curb inflation. President Joe Biden’s top energy adviser said on Sunday the cut was largely a political move.

Brent remains steeply backwardated, a bullish structure where near-dated contracts are more expensive than later-dated ones. The prompt time spread was US$2.16 in backwardation, compared with US$1.44 a week earlier. BLOOMBERG