Oil slides 2%, posts second weekly decline as supply fears recede

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Oil dropped by about 2% on Friday, logging a second weekly decline, due to concern about weakened demand in China and further increases to U.S. interest rates.

Brent crude settled at $87.62 a barrel, falling $2.16, or 2.4%. U.S. West Texas Intermediate (WTI) crude settled at $80.08 a barrel, losing $1.56, or 1.9%.

he market structure of both oil benchmarks shifted in ways that reflect dwindling supply concerns.

Crude came close to record highs earlier this year as Russia’s invasion of Ukraine added to those worries. In addition, the front-month futures contract soared to a gigantic premium over later-dated contracts, a signal that people were worried about the immediate availability of oil and were willing to pay handsomely to secure supply.

The market structure of both oil benchmarks shifted in ways that reflect dwindling supply concerns.

Crude came close to record highs earlier this year as Russia’s invasion of Ukraine added to those worries. In addition, the front-month futures contract soared to a gigantic premium over later-dated contracts, a signal that people were worried about the immediate availability of oil and were willing to pay handsomely to secure supply.

Those supply concerns are waning. The current WTI contract is now trading at a discount to the second month , a structure known as contango, for the first time since 2021, Refinitiv Eikon data showed.

This condition will also benefit those looking to put more oil in inventories for later, especially with stocks still at low levels.




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