Oil’s Three-Day Rally Halts as US Throws SPR Refill Into Doubt
2023.03.23 16:38
(Bloomberg) — Oil reversed its advance after the US government walked back earlier expectations of refilling the Strategic Petroleum Reserve.
The US energy secretory told lawmakers Thursday that refilling the SPR would be “difficult” this year. Last year, the administration said it would consider buying crude back when prices fell to around $70 a barrel. Thursday’s announcement chilled what looked set to be a four-day advance for oil from last week’s battering by banking turmoil.
READ MORE: Oil Reserve Refill is ‘Difficult’ This Year, Energy Chief Says
On the other side of the globe, a closely watched gauge of Asian oil demand is at its tightest level in more than two years signaling a potential ramp up in China’s economy after the end of Covid Zero policies last year. Still, the actual pace of the recovery has been slower than expected, adding a bearish headwind.
There are some signals that underlying bearishness may continue. Brent’s nearby put skew — a gauge of how much more traders are willing to pay for contracts that profit from a price decline rather than a rally — hovered near levels last seen in mid-August.
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Story Link: Oil Drops as Investors Assess Fed’s Message, Outlook for Dollar
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