Oil steady after two-day gain as supply issues blunt demand woes

Oil steadied after two days of gains with an uncertain demand outlook being partially offset by disruptions to supply from Iraq.

West Texas Intermediate traded below $79 a barrel after rallying around 2 per cent over the previous two sessions.

Fuel markets are slumping as refining margins shrink in Asia, with a hoped-for sharp rebound in China still proving elusive.

On the supply front, shipments from Iraqi Kurdistan remain paused — causing some tankers to leave ports there empty-handed. There are also supply risks in Sudan, where heavy fighting continued between groups vying for control of the North African nation.

Read: Thousands flee Sudan fighting as countries pull out diplomats

Russian exports remain resilient, however, despite an earlier pledge to cut production, blunting the impact of the disruptions in the Middle East.

Some Russian crude has been bought by Indian refiners above the Group of Seven-led price cap, according to India’s Oil Secretary Pankaj Jain. However, most transactions still remained below the limit, he said.

Crude is now hovering a few dollars above where it was just before the Organization of Petroleum Exporting Countries and its allies shook markets with a surprise output reduction at the beginning of April.

Expectations that holidays in China next week will boost jet fuel consumption are providing some hope of an uptick in oil prices.

Also read: Saudi Arabia’s 2022 GDP grows 8.7 per cent, boosted by higher oil prices