Oil posted a weekly decline as demand concerns continue to dominate market sentiment even after Saudi Arabia’s unilateral pledge to cut production.
West Texas Intermediate settled near $70 a barrel, closing out the week lower than where it last stood before Saudi Arabia’s surprise weekend announcement. The commodity clocked a 2% weekly decline even with the wild gyrations set off by dueling international headlines. Riyadh’s surprise decision to cut output by about 1 million barrels caused a short-lived rally that was whittled away by demand fears.
Oil briefly fell below $70, shedding almost 5% in less than an hour, on reports in Middle Eastern media — quickly disavowed by government officials — that the US and Iran were making progress on nuclear talks. While prices largely recovered, traders said the stampede reflected the market’s willingness to sell.
“We have been continuously selling for about six months to nine months,” said Jeff Currie, head of commodities research at Goldman Sachs Group Inc. said in a Bloomberg Television interview.
The US oil benchmark has fallen about 14% from a mid-April peak on signs that China’s recovery is stalling and the US will need to keep raising interest rates to rein in inflation. Also, Russia’s crude exports have been more resilient than anticipated, adding to supply.
Despite the weakness in oil’s flat price, there were a few flickers of bullish sentiment. Money managers bolstered their bullish bets on Brent crude to a six-week high in the week ending June 6th.
- WTI for July delivery dropped $1.12 to settle at $70.17 a barrel in New York.
- Brent for August settlement fell $1.17 to settle at $74.79 a barrel.