Oil edged lower on signs that market fundamentals are getting shakier, though there was broader support from the recent slide in the dollar. Futures in New York declined toward $41 a barrel. The market’s structure tumbled on Monday in London and the Middle East, and the value of physical crude barrels in key regions has weakened. Russia’s Urals oil is being offered at three-month lows, and key swaps tied to the North Sea crude that prices much of the world’s oil have also slipped.
Nervousness is increasing as the OPEC+ alliance prepares to taper cuts from next month at the same time as the pandemic stages a comeback in countries from China to Spain to Germany. A gauge of dollar strength fell to the lowest level since September 2018, providing more support for oil that’s priced in the U.S. currency.
“Compared to the March to May period, it is almost like we are sailing a sea of tranquility,” said Harry Tchilinguirian, oil strategist at BNP Paribas SA. “A let-up in Chinese demand appears to be more readily reflected in the shape of the oil curves than necessarily in the flat price.”