Oil Slips From 7-Year High Amid Broader Commodities Decline

Oil Slips From 7-Year High Amid Broader Commodities Decline

Oil Slips From 7-Year High Amid Broader Commodities Decline

(Bloomberg) — Oil fell from a seven-year high amid a stronger dollar and broad-based retreat in industrial commodities.

Most Read from Bloomberg

Futures in New York declined as much as 1% on Thursday after holding at the highest since 2014 this week. Commodities including iron ore slid as the prospect for headwinds to China’s economy grows, while the dollar rose, making energy and metals priced in the currency less attractive.

Despite Thursday’s price decline, the structure of the U.S. crude market is holding up as stockpiles continue to drain at the key storage hub of Cushing, Oklahoma. Nearby West Texas Intermediate crude spreads surged to a three-year high, and the closely-watched spread between the nearest December contracts is at the strongest since 2013.

Oil is holding near the highest levels since 2014 with supplies depleting as coal and natural gas shortages drive greater crude consumption. Saudi Arabia said any extra oil from OPEC+ would do little to tame the surging cost of gas, predicting demand may rise as much as 600,000 barrels a day if the northern hemisphere’s winter is colder than normal.

The oil market is tightening but neither additional supply from OPEC+ nor a U.S. Strategic Petroleum Reserve release will meet the growing demand for sweet grades, Energy Aspects Ltd. said in a note this week.

“Modest supply-growth amid recovering demand means that oil inventories are likely to continue to decline over the coming weeks and keep oil prices supported,” UBS Group AG analysts including Giovanni Staunovo wrote in a note.

Most Read from Bloomberg Businessweek

©2021 Bloomberg L.P.