(Bloomberg) — Oil steadied after a three-day slump as warnings from major US banks of a tough outlook for 2023 stoked concern over prospects for demand and dented appetite for risk assets.
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West Texas Intermediate held above $74 a barrel after futures sank almost 9% over the previous three sessions despite optimism surrounding China’s move to loosen strict virus curbs. Among the predictions, Goldman Sachs Group Inc. Chief Executive Officer David Solomon said that he saw “bumpy times ahead.”
Crude is limping into the end of the year, with the US benchmark heading for the first back-to-back quarterly drop since mid-2019. The latest leg down comes at a complex moment, with traders assessing the fall-out from fresh Group of Seven curbs on Russian oil, including a price cap that’s meant to punish Moscow for the war in Ukraine. The slump comes against a backdrop of dwindling liquidity in the oil market, with declining interest stoking volatility.
In response to the cap, which has been set at $60 a barrel, Russia is considering setting a price floor for its international oil sales. Moscow may either impose a fixed price for the nation’s barrels, or stipulate maximum discounts to international benchmarks at which they can be sold.
Time spreads are signaling ample near-term crude supplies, with the three-month spread for global benchmark Brent slipping further into contango, when later-dated futures trade at a premium to prompt contracts. The gap was last at 53 cents a barrel in contango, compared with more than $4 a barrel in the opposite backwardated structure a month ago.
The American Petroleum Institute, meanwhile, reported that US stockpiles decreased by more than 6 million barrels last week, according to people familiar with the figures. Official inventories data follow later Wednesday.
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