Oil swung between gains and losses as traders weigh the ongoing impact of a global energy crunch and dwindling inventories at a key US storage hub.
Front-month futures in New York traded below $83, paring an earlier drop as the dollar cooled.
While headline prices have been volatile over the past two sessions, the market’s structure has surged with the energy crisis leading to crude stockpiles at the key US storage of Cushing rapidly draining to near critically low levels.
One key physical market gauge – the so-called cash roll – surged to its strongest level since 2018. The rise is one of a number of signs this week that traders are pricing increasingly tight supplies at the vital US hub.
Oil rallied to the highest level since 2014 this week as the energy crunch – prompted by coal and natural gas shortages – coincided with an economic recovery from the pandemic.
US President Joe Biden, meanwhile, said that Americans should expect high fuel prices to continue into next year because Opec is withholding supply.
The White House has been communicating with the group over the past few months, pushing them to boost crude production.
“The near-term oil price outlook remains constructive,” said Stephen Brennock, an analyst at PVM Oil Associate. “A widening supply deficit will continue to keep upwards pressure on crude prices in the year-end period.”
