Oil holds loss on signs of supply rebound as demand woes linger

Oil held a decline on signs that supply is rebounding while concerns linger about demand in China, the biggest importer.

West Texas Intermediate futures for October traded near $80 a barrel, after falling 0.7% on Monday. Exports from Iran surged to 2.2 million barrels a day this month, while Reuters reported that Iraq’s oil minister arrived in Ankara to discuss issues including resuming shipments through the Ceyhan terminal.

A rally in crude that started in late June has faltered over the last couple of weeks, with futures back to where they were at the start of the year. Efforts by OPEC+ linchpins Saudi Arabia and Russia to curb production have tightened the market but the demand outlook in China is worsening and there are signs US interest rates will need to stay higher for longer to rein in inflation.

“Supply tightness could ease” as Iraq plans the resumption of oil exports from Ceyhan, said Charu Chanana, market strategist for Saxo Capital Markets Pte, noting that flows were around 500,000 barrels a day before they were halted. “With the demand outlook also deteriorating, the downside in oil prices could become more pronounced.”

Elsewhere, the price of Russia’s flagship oil may have jumped above a Group of Seven imposed cap, but that has done little to impede the provision of services for the trade. Ships owned or insured by companies based in countries signed up to the cap still represent a vital part of Moscow’s petroleum supply chain.

Prices:
WTI for September delivery was steady at $80.70 a barrel at 11:57 a.m. in Singapore. September futures expire Tuesday. The more-active October contract was 0.2% lower at $79.99. Brent for October settlement declined 0.2% to $84.34 a barrel.

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