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(Bloomberg) — Brent oil was on track to post its worst quarterly data loss in more than three decades as persistent concerns about the demand outlook weighed on prices.
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London futures traded above $74 a barrel, down for the fourth quarter, while West Texas Intermediate was heading for its first consecutive decline since 2019. The market faced a host of headwinds, from aggressive rate hikes to China. Slow economic recovery and flexible Russian supplies.
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This culminated in a permanent bearish tone that managed to eclipse any optimism about supply cuts by Saudi Arabia or strong summer demand. The recent, short-lived uprising in Russia also failed to yield meaningful gains.
The outlook for the second half is mixed. There is some optimism that the market will tighten and this will support prices, but Federal Reserve Chairman Jerome Powell and some of his peers said on Wednesday that more interest rate increases are likely, a measure that will affect energy consumption.
RBC Capital Markets LLC says the market should tighten next month, in part because seasonal maintenance is over, but “apathy will linger in the balance of the year” if that doesn’t materialize.
Yeap Jun Rong, market analyst at IG Asia Pte, said oil markets “will be walking a tightrope, as leading indicators suggest that downside risks to growth will remain on the table over the coming months.” in Singapore. He added that prices are unable to find much conviction for a more sustainable rebound.
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