Oil steady as physical market shows signs of tightness

Oil steady as physical market shows signs of tightness

Oil prices were little changed on Tuesday, holding on to their gains from the previous day, as some positive signals in the physical market offset the bearish impact of a stronger dollar and rising US output

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Brent crude, the global benchmark, traded above $82 a barrel, while US West Texas Intermediate was below $78. Both contracts rose by more than 1% on Monday, supported by robust demand from refineries in China and the US, the world’s two largest oil consumers.
The physical market also showed signs of strength, with some US grades trading at premiums to the futures and the spread between the first and second month contracts widening in favor of the near-term. These indicators suggest that supplies are tight and buyers are willing to pay more for prompt delivery.
Oil prices have been trading in a narrow range for most of this year, as the market balanced the positive effects of OPEC+ supply cuts and geopolitical tensions in the Middle East against the negative factors of rising non-OPEC production, especially from the US, and a subdued demand outlook for China.Oil Steadies With Physical Markets Showing Signs of Strength

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Some analysts expect the rangebound trading to continue in the near term, as the market awaits more clarity on the direction of the global economy and the coronavirus pandemic. Goldman Sachs and Bank of America have both predicted that oil prices will stay within a $20 band around $70 a barrel, with low volatility.
“Oil markets have performed relatively well this year, despite the weakness of the broader commodity complex,” said Han Zhong Liang, an investment strategist at Standard Chartered. He attributed the resilience of oil prices to the high compliance of OPEC+ members with their output quotas and the geopolitical risks in the Middle East.
Oil Steadies With Physical Markets Showing Signs of Strength

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Source : yahoo finance

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