Oil fluctuates on demand concerns, US reserve restocking plan

Oil fluctuated as traders grappled with the outlook for Chinese demand and assessed comments from the US on refilling strategic reserves.

West Texas Intermediate swung between gains and losses before trading little changed near $88 a barrel. Global benchmark Brent traded close to $94.

China’s Chengdu was easing lockdown measures in parts of the city Thursday. The country is considering allowing its refiners to export more fuel in an attempt to help revive its economy, a move that has roiled global refined fuels markets in recent days. 

The US Department of Energy, meanwhile, said that its plan to restock the nation’s emergency oil supply doesn’t include a trigger price, and that such purchases aren’t likely to occur until after fiscal 2023. Bloomberg News reported Tuesday that administration officials have discussed refilling the Strategic Petroleum Reserve, or SPR, should crude prices dip below $80.

Oil is on course for the first quarterly loss in more than two years as central banks including the Federal Reserve tighten monetary policy to tame inflation, hurting the outlook for energy consumption. The retreat has erased all the gains seen in the wake of Russia’s invasion of Ukraine, with prices earlier this month hitting the lowest level since January.

“Whilst challenging the $100 a barrel hurdle is currently not dead cert it seems that a bottom at around $90a barrell has been found basis Brent, largely thanks to war-related supply fears,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. 

Widely-watched oil market time spreads have been volatile. Brent’s prompt spread -- the difference between its two nearest contracts -- was $1.05 a barrel in backwardation. That compared with 90 cents a week ago, while the measure was more than $2 as recently as last month.