Oil prices climbed back above $83 a barrel despite earlier losses, thanks to a weaker dollar which boosted commodities priced in the currency. The strengthening equities markets also played a role in supporting crude futures, which had been trading in a narrow range for much of the session following negative US inflation data.
According to Keshav Lohiya, founder of consultant Oilytics, the oil markets are still searching for an equilibrium price due to the absence of major geopolitical headlines and data releases. While crude prices have been supported by supply cuts from OPEC+ and tensions in the Middle East this year, recent easing of geopolitical risks has caused prices to pull back from recent highs.
The options market continues to show a bearish tilt towards puts, and the US Oil Fund, the largest oil exchange-traded fund in the world, experienced its largest daily outflow on record. Additionally, the demand outlook remains uncertain, with weak profit margins for turning crude into diesel in Asia pointing to potential struggles ahead.
Despite these challenges, oil prices remain relatively high, supported by a variety of factors. The market continues to adjust to changing economic conditions and geopolitical developments as it seeks stability in the face of ongoing uncertainty.