Oil Falls In Light Trading Despite Tightening Crude Supplies

(Bloomberg) — Oil struggled to hold onto the week’s modest rally as an improving economic picture sets the stage for further monetary tightening.

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West Texas Intermediate followed other markets lower, though tightening US crude supplies and the prospect of China’s comeback from lockdowns held declines in check. While participation in oil markets has dwindled heading into the Christmas holidays, liquidity has been poor for much of this year, adding to volatility.

“Energy traders seem to be ready for the holidays as we are not really seeing any exciting moves,” said Ed Moya, senior market analyst at OANDA. “The oil market’s biggest wildcard is China and optimism is still strong that the reopening will continue and eventually lead to more demand for crude.”

Still, oil is poised to end a volatile year modestly higher. Group of Seven sanctions on Russian flows, and scope for OPEC and its allies to cut supply are boosting prices.

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–With assistance from Archie Hunter and Anthony Di Paola.

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