Oil holds near three-month low as demand concerns reverberate

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Oil held near the lowest level in almost three months on persistent concerns over the demand outlook in China and the US.

West Texas Intermediate edged higher to trade above $67 a barrel, after losing around 8 per cent over the previous three sessions.

Chinese trade data and figures showing international flights from Northeast Asia are still 41 per cent below pre-virus levels highlighted the lackluster recovery in the world’s top crude importer.

A slowing US economy and resilient Russian exports are adding to the downward pressure, cancelling out Saudi Arabia’s recent decision to cut one million barrels a day of production.

Goldman Sachs Group lowered its oil price forecasts for the third time in six months on Sunday, saying it sees supplies swelling and demand waning.

Near-term timespreads are also signalling weakness. The prompt spread for global benchmark Brent — the gap between the two nearest contracts — was briefly at parity on Monday, showing ample supply.

Spreads for the US benchmark have also been falling recently.

Still, there are signs of fresh physical demand, with US sour crude prices at their strongest in a year following the nation’s pledge to refill its strategic reserves.

Also, moderating US inflation is set to support the Federal Reserve’s efforts to pause interest-rate hikes this week, which could buoy energy demand.

Read: Saudi Arabia to cut additional one million barrels in oil production after OPEC+ talks