(Bloomberg) -- Oil fluctuated as investors weighed lingering concerns about an economic slowdown against bullish signals from the US and OPEC.
West Texas Intermediate traded near $88 a barrel after closing 1.8% higher on Wednesday following a choppy session. Futures are on track for a weekly loss as fears over a downturn continue to hang over the market. The potential for a nuclear deal and more oil from Iran have added to the bearish sentiment.
A bullish Energy Information Administration report offset some of the gloom, however. US crude stockpiles sank by 7.06 million barrels last week, exports rose to a record and gasoline demand climbed to the highest this year.
Crude is trading near the lowest level in more than six months after giving up all of the gains made after Russia's invasion of Ukraine, with time spreads signaling market tightness is easing. Still, OPEC's new Secretary-General Haitham Al Ghais said spare production capacity was "becoming scarce" and that he was confident demand will increase this year.
"The market appears to be slightly too bearish on the demand side," said Daniel Hynes, senior commodity analyst at Australia & New Zealand Banking Group Ltd. "While we may see demand fall back on a seasonal basis, things are looking much tighter in the fourth quarter."
US crude exports reached 5 million barrels a day last week, surpassing a high set barely a month ago, EIA data show. The four-week average of gasoline supplied -- a proxy for demand -- rose to about 9.1 million barrels a day, coinciding with the longest streak of declines in pump prices since 2018.
While the market is backwardated, a bullish pattern marked by near-term prices commanding a premium to later-dated ones, the gap has narrowed significantly. Brent's prompt spread was 60 cents in backwardation, compared with $2.08 at the start the month
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