Oil steadies near $80 as traders seek clues on demand outlook

Oil steadied as equity markets ticked higher and traders waited for the next set of clues on the outlook for crude demand in the US and China.

West Texas Intermediate traded near $80 a barrel after gaining 1.5% over the past three days, the longest winning run since late July. The climb puts the US benchmark back close to the level at which it started the year. In broader markets, Asian stocks followed US equities higher.

China’s biggest refiner, Sinopec, said that the country’s product demand in the second half would expand at a slower pace than in the first. In the US, meanwhile, there are expectations that the Federal Reserve isn’t yet done with its campaign of monetary tightening to quell too-hot inflation.

Crude is headed for a small monthly loss after jumping in July as supply curbs from OPEC+ producers Saudi Arabia and Russia tightened the market. Still, there’s speculation the US could ease sanctions against Venezuela and Iran, potentially increasing global flows. In addition, Turkey said it was about to conclude technical work on a key Iraqi pipeline, aiming to make it operational again as soon as possible, Energy Minister Alparslan Bayraktar said.

Widely-watched timespreads, however, continue to signal strength as OPEC+ keeps supply curtailed, with scope for Riyadh to prolong a reduction into October. The gaps between the nearest two contracts for WTI and Brent are firmly backwardated, with nearby contracts at a premium to longer-dated ones.

“The anticipation that the producers’ cartel might extend the announced production cuts to October has extended further support,” said Priyanka Sachdeva, senior market analyst at Philip Nova Pte. “But growing macroeconomic fears amid higher borrowing costs is keeping a lid on any upside.”

Prices:
WTI for October delivery fell 4 cents to $80.06 a barrel at 11:03 a.m. in Singapore. Brent for October settlement was 2 cents higher at $84.44 a barrel.

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