Oil Edges Higher as Market Tracks Risk-On Tone and China Demand

(Bloomberg) -- Oil rose after a weekly loss as a risk-on tone returned to wider markets, although concerns remain over China’s demand outlook and plentiful global supply.

Brent rose above $71 a barrel after tumbling 3.8% last week, while West Texas Intermediate was near $67, as Asian shares turned higher and commodities advanced. A dollar index held a decline, providing some relief to buyers of raw materials that are priced in the currency.

Oil has swung between gains and losses since mid-October, with hostilities in the Middle East at times raising fears of an escalation and potential disruption to supplies. Weak Chinese consumption, however, has impacted sales of Angolan crude for December, while forecasters including the International Energy Agency see the prospect for a sizeable supply glut next year.

“Market participants continue to fret over the prospects for higher supplies from the US and OPEC+” and the outlook for China’s economy, said Jun Rong Yeap, a market strategist with IG Asia Pte. “There’s not much of a bullish catalyst for oil prices to ride on.”

Investors are monitoring developments on Russia’s war in Ukraine, with allies pushing Volodymyr Zelenskiy to consider new ways to engage Vladimir Putin to negotiate an end to the conflict. The US is also nearing a decision to lift some restrictions on Ukraine’s use of Western-made weapons to strike limited military targets in Russia, according to people familiar.

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