Oil held gains after a government report showed the US shipped a record amount of crude and refined products overseas as energy-starved economies scramble for supplies.
West Texas Intermediate futures traded near $95 a barrel after surging around 5% over the previous two sessions. The volume of crude and products such as diesel exported from the US last week was the highest in data going back to February 1991, according to the Energy Information Administration.
Crude is heading for a weekly gain as signs of a tightening supply outlook offset concerns over an economic slowdown. Exports from Kazakhstan may be disrupted for months due to damage at a terminal, while Saudi Arabia has flagged potential production cuts by OPEC+ to calm a volatile market. Other members of the cartel including Iraq and Kuwait expressed support.
Investors are also monitoring progress on the revival of a nuclear deal with Iran, which could lead to a surge in flows from the member of the Organization of Petroleum Exporting Countries. The Persian Gulf nation said it’s reviewing the Biden administration’s response to a European Union-drafted plan to rescue the 2015 accord, including US comments on amendments suggested by Tehran.
“Market sentiment remains in flux and at least two major short- to medium-term uncertainties on the fundamentals front need to be settled — the fate of the Iran deal and the global oil demand trajectory,” said Vandana Hari, founder of Vanda Insights in Singapore. “OPEC+ cuts are easier said than done.”
Iran will seek to fill the void left by Russia in Europe, and try to win back customers in countries including Greece, Italy, Spain and Turkey if a deal is secured, according to people familiar with the matter. Moscow has also approached several Asian countries to discuss possible long-term oil contracts at steep discounts as US officials continue to push a price-cap plan.
Adding to bullish sentiment is China’s plan to boost its economic stimulus with a further 1 trillion yuan ($146 billion) of measures for an economy stricken by property-sector woes, Covid-linked mobility curbs and some power shortages. However, there’s some uncertainty about whether the efforts are sufficient.
Investors are also counting down to the Federal Reserve’s Jackson Hole symposium on Friday to glean further clues on the state of the global economy and the outlook for interest rate hikes from the central bank.
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