(Bloomberg) — Oil clawed back some losses after a three-day slide as investors weighed the fallout from Russia’s invasion of Ukraine and virus lockdowns in China.
Futures in New York climbed to trade near $96 a barrel after slumping 13% over the past three sessions. The war has severely disrupted Russian oil flows, and the International Energy Agency predicted the nation’s output will drop by about a quarter next month. Libya’s prime minister said OPEC should boost supply faster to help solve the “energy crisis.”
Investors are also monitoring a virus resurgence in China, the world’s largest oil importer. Traffic congestion levels in partially locked down Shanghai are more that a third lower than a year ago and there are also restrictions on movement in the manufacturing hub of Shenzhen and Jilin province.
Rapid developments around the war in Europe and the ensuing sanctions are driving wild fluctuations in the market, and holdings in oil contracts have slumped due to the volatility. U.K. Prime Minister Boris Johnson said that he’s optimistic Saudi Arabia may raise output after a meeting with the kingdom’s Crown Prince, but he got no guarantees that would occur.
Russia said a Ukrainian proposal that it would become a neutral country but retain its own armed forces could be viewed as a compromise, offering for some hopes for a cease-fire. A Ukrainian official cautioned that issues remained and said talks hadn’t progressed significantly.
The U.S. Federal Reserve, meanwhile, raised interest rates by a quarter percentage point, launching a campaign to tackle the fastest inflation in four decades even as risks to economic growth mount.
had surged to nearly $140 a barrel earlier this month, only to swiftly fall back to below $100 this week, exceeding the threshold of 20% used to characterize a bear market. The extent of the liquidation shows up in open-interest data. Holdings in oil futures have fallen to the lowest since 2015 across the main Brent and contracts combined.
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