Oil Extends Worst Run of Losses This Year Ahead of Fed Minutes

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(Bloomberg) — Oil extended its longest run of losses this year ahead of the release of minutes from the Federal Reserve that may provide further clues on the path forward for monetary tightening in the US.

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West Texas Intermediate dipped toward $76 a barrel after falling for a fifth session on Tuesday. The prospect of more aggressive interest-rate hikes from the Fed to combat inflation have kept a lid on prices, despite increasing evidence of a robust recovery in China following the end of Covid Zero.

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See also: China’s Binge on Russia Oil Hits Africa, South America Producers

The market has endured a bumpy ride this year as traders juggle concerns over a US slowdown and China’s rebound from virus curbs to try and determine the direction for global energy demand. That’s trapped futures within a range of around $10 a barrel as the bullish and bearish narratives clash.

The fallout from sanctions on Russian crude and oil products, and the rerouting of global trade flows has added another element of uncertainty to the market. The US is planning more penalties, including on the nation’s energy sector.

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“Expectations for a more hawkish Fed continue to grow, which is providing strong headwinds to the oil market,” said Warren Patterson, the Singapore-based head of commodities strategy at ING Groep NV. However, the market is likely to tighten significantly over the second half of the year, which should see prices break out of the current range, he added.

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