Business Maverick: Oil pushed into retreat as recession angst rattles investors

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US President Joe Biden is expected to call for a fuel tax holiday, after the average retail price topped $5 a gallon this month following a surge of more than 50% in 2022.

Oil is headed for a monthly loss as concerns about a broad economic slowdown offset the fallout from the war in Ukraine and signs of still-tight conditions. Supermajor Exxon Mobil Corp. warned this week that crude markets may remain tight for years, while, the world’s largest independent oil trader, flagged rising fuel demand in China. At the same time, soaring margins are offering refineries an incentive to buy every barrel of crude they can get.

“Broader macro influences have been dictating price direction for oil recently,” said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore. “However, fundamentally the market still remains constructive. The oil balance is set to be tight for the remainder of the year, while in the shorter term strong refinery margins should be supportive for crude demand.”, which may sap energy demand, have mushroomed in recent days after the Fed hiked rates. Everyone from Tesla Inc.

Still, oil markets remain in backwardation, a bullish pattern that’s marked by near-term prices trading above longer-dated ones. Brent’s prompt spread – the difference between its two nearest contracts – was $2.89 a barrel in backwardation, compared with $2.73 a barrel at the start of this month. “With commodity demand above supply, markets remain tight even as growth rates slow, as evidenced by the high level of prompt backwardation in key markets like oil,” Goldman Sachs Group Inc. said in a note. “Investors should remember that Fed-induced slowdowns are simply a short-term abatement of the symptom,

 

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