West Texas Intermediate declined to near $89 a barrel, dropping for a third day in the longest losing run in almost a month. While the US central bank left its benchmark rate unchanged at a midweek meeting, it also flagged borrowing costs will likely stay higher for longer after one more increase this year. Crude fell alongside other risk assets, including equities, while the dollar rose.
Still, official data showed oil inventories at the Cushing, Oklahoma, storage hub declined by 2.1 million barrels last week, cutting holdings to the lowest since July 2022. Stockpiles are only narrowly above the 20 million-to-22 million barrel volume that’s seen as the minimum operating level for the facility.
Crude has rallied strongly this quarter as Saudi Arabia and Russia extended their production curbs to year-end. A brightening outlook in the world’s two biggest economies — the US and China — has also bolstered prospects for prices, with a growing pool of voices floating the possibility that $100 oil will return, including at Chevron Corp. and Goldman Sachs Group Inc.
The Fed’s messaging “has put some pressure on risk assets, including oil,” said Warren Patterson, head of commodities strategy at ING Groep NV. While Brent’s likely to break above $100 in the near term, that won’t be sustainable, he said. The bank maintains its call for Brent to average $92 next quarter.Oil’s retracement has helped to drag WTI’s 14-day relative-strength index back below 70, the level that can signal a pullback is in the offing.
Still, widely watched timespreads remain robust, signaling scarce near-term supply. Brent’s prompt spread — the gap between the two nearest contracts — was $1.19 a barrel in a bullish backwardated pattern, from 76 cents a week ago.