Oil Rallies as Tight Supplies Counter Expectations of a Slowdown
- Physical crude cargoes are changing hands at large premiums
- Economic slowdown fears remain a bearish cap on prices
An oil pump jack in Midland, Texas.
Photographer: Sergio Flores/BloombergThis article is for subscribers only.
Oil rose as tight near-term supplies outweighed expectations of another rate hike this week and an eventual economic slowdown.
West Texas Intermediate rose 2.1% to settle above $96 a barrel. The Federal Reserve is expected to increase interest rates this week to slow down economic growth. Despite the gloomier outlook, crude markets are pricing in remarkable strength for physical barrels with some buyers in Asia paying premiums of more than $20 a barrel to secure certain crude grades. Nearby Brent futures are trading about $5 over the next month’s contract, indicating refiners are willing to pay up to secure supplies.