© Reuters. An aerial view shows tugboats helping a crude oil tanker to berth at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang province, China July 18, 2022. cnsphoto via REUTERS /file photo
By Shariq Khan
BENGALURU (Reuters) -Oil prices closed a volatile session slightly higher on Thursday, falling a dollar a barrel in early trading on demand worries and a strong dollar, but then bouncing back after a report of sliding gasoil stocks in Europe.
Prices began to recover at mid-morning in New York after Dutch consultancy Insights Global posted data showing gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub declined by 3% in the latest week.
rose 15 cents, or 0.2%, to $83.36 a barrel, while U.S. West Texas Intermediate crude rose 16 cents, or 0.2%, to $79.05 a barrel. Prices traded lower for the majority of the session, before pushing higher in the last half hour of trading.
Falling refined product stocks in Europe and a drop in the 2-year U.S. treasury yields likely lifted oil prices, UBS analyst Giovanni Staunovo said, adding that volatility is likely to persist until investors get clarity on the U.S. Federal Reserve’s next moves.
Federal Reserve officials and other global central bankers were headed to Jackson Hole. Fed Chair Jerome Powell will address the symposium on Friday. Investor caution on the eve of his remarks lifted the safe-haven dollar, which makes oil more expensive for holders of other currencies, denting demand.
On Wednesday, Japan reported shrinking factory activity for a third straight month in August. Euro zone business activity also declined more than expected and Britain’s economy looked set to shrink in the current quarter.
U.S. business activity approached the stagnation point in August, with growth at its weakest since February. But data also that showed labor market conditions remained tight despite the Fed’s aggressive interest rate hikes.
“The U.S. is still in a strong position but there are areas of weakness and if interest rates are going to stay higher for longer, further cracks could appear,” said Craig Erlam, analyst at OANDA.
“Perhaps this economic doubt has contributed to the stalling we’ve seen and may even trigger a correction,” Erlam added.
On the supply side, Iran’s output will reach 3.4 million barrels per day (bpd) by the end of September, the country’s oil minister was quoted as saying by state media, even though U.S. sanctions remain in place.
U.S. officials are also drafting a proposal that would ease sanctions on Venezuela, allowing it to export more oil if the South American nation moves toward a free and fair presidential election, according to sources.