By Saket Sundria and Alex Longley
Oil has got off to a weak start in September with many countries still fighting to contain the coronavirus. The market will be watching August non-farm payroll data due Friday for signs of improvement in the U.S. economy. At the same time, crude supply is likely to remain higher than expected as Iraq is struggling to meet its output commitments under the OPEC+ deal.
“In WTI, the return of $40 probably helped attracted some short covering, potentially signaling range-bound trading in the low-$40s,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. Prices have been supported by a stabilizing dollar and healthier U.S. jobless data earlier in the week ahead of payrolls later, he said.
The diesel market is also weighing on the overall demand outlook. The fuel’s premium to Brent, a key metric used to gauge the market’s strength, plunged to the lowest in at least nine years due to stuttering consumption and a glut of supply. Diesel, used to power heavy industry such as agriculture and mining, as well as cars and trucks, is an important marker of economic health.
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