Oil holds near lowest since January with demand outlook dimming

Oil held near the lowest level since early January as recessionary concerns, tighter monetary policy, and a rally in the dollar dimmed the outlook for energy demand and dented appetite for risk assets.

West Texas Intermediate was steady below $77 a barrel after sinking more than 8 per cent over the previous two sessions. A Bloomberg gauge of the US currency was near a record after rising for five days, making commodities including crude and copper more expensive for most buyers.

A parade of Federal Reserve policy makers signaled that further rate rises were in store, with the need to tame inflation coming at the cost of a slowdown. Among them, Fed Bank of Cleveland President Loretta Mester said officials will need to keep restrictive policy in place for longer.

The US oil benchmark is on track for its first quarterly loss in more than two years on concern that energy consumption will fall even as the Russia-Ukraine crisis drags on. The slump may spur the Organization of Petroleum Exporting Countries and allies to consider paring supply to stem the rout.

Widely-watched time spreads have been on the decline, suggesting that market tightness is gradually dissipating.

Brent’s prompt spread — the difference between the two nearest contracts — was $1.21 a barrel, compared with about $2 a month ago.