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Business News/ News / Oil Dips as Lack of New Catalysts Halts Rally at Technical Level
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Oil Dips as Lack of New Catalysts Halts Rally at Technical Level

Oil fell as the lack of fresh drivers prompted some investors to exit positions ahead of the weekend and the dip below a key technical indicator accelerated selling.

Oil Dips as Lack of New Catalysts Halts Rally at Technical LevelPremium
Oil Dips as Lack of New Catalysts Halts Rally at Technical Level

(Bloomberg) -- Oil fell as the lack of fresh drivers prompted some investors to exit positions ahead of the weekend and the dip below a key technical indicator accelerated selling.

West Texas Intermediate slipped nearly 3% to end the session under $77 a barrel, below its 200-day moving average and the lowest close since Feb. 8. Timespreads are indicating a more robust market, and US crude inventories expanded less than forecast, but many analysts still expect a global surplus this year. WTI still is up about 7% this year.

A package of new US sanctions against Russia didn’t appear to include major energy-related curbs, and media reports suggested Israel will send negotiators to truce talks in Paris on Friday. 

“No increased energy sanctions and ceasefire talks over the weekend are causing some to take dollars off the table in crude," said Rebecca Babin, a senior energy trader at CIBC Private Wealth.

Oil has been caught between the bullish tailwinds of lower OPEC output and rising Middle East tensions, and bearish concerns about flagging consumption in top importer China. The International Energy Agency said earlier this month that the global oil market could remain in surplus all year.

“Strong-enough oil demand juxtaposed with weak Chinese macroeconomic data has been a recurring theme," Michael Tran, an analyst at RBC Capital Markets LLC, said in a note. “So far, fundamental signals have been a mixed bag."

Attacks on commercial shipping in the Red Sea by Houthi militants have added to the risk premium for oil futures. The group and their Iranian backers are preparing for a lengthy confrontation with the US and its allies around the waterway — regardless of how the Israel-Hamas war plays out.

While US crude stockpiles rose less than expected last week, they were still up for a fourth week. Inventories at Cushing, Oklahoma, the delivery point for West Texas Intermediate futures, also climbed, but remain below seasonal averages. 

To get Bloomberg’s Energy Daily newsletter in your inbox, click here.

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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Published: 24 Feb 2024, 02:15 AM IST
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