West Texas Intermediate futures dipped below $108 a barrel, having earlier topped $109, with trading volumes curtailed by the US Fourth of July holiday.
Crude has been buffeted over the past month by indications of an impending recession, yet supply outages, including in Libya, have offset some of the weakness. Key time spreads also show a robust market.
Oil remains more than 40% higher this year after being boosted by the war in Ukraine, which triggered a wave of sanctions on Russian flows. Many product prices are still elevated and Vitol Group, the biggest independent oil trader, warned at the weekend that surging fuel costs are starting to hurt demand.
Lofty gasoline prices are a challenge for President Joe Biden, who has tapped strategic oil reserves and pushed Middle Eastern suppliers to raise output to bring costs down. In a tweet, Biden urged companies running gas stations to lower prices, a post that was criticized by Amazon.com Inc. founder Jeff Bezos.
“Every new day of political headlines in the oil markets continues to increase the risk of a badly planned regulation that can impact oil flows overnight,” Keshav Lohiya, founder of consultant Oilytics, said following Biden’s remarks. Yet the Fourth of July holiday means markets on Monday should be “quiet.”
Across the oil market there remain signs of strength. Brent is in a backwardation of almost $4 a barrel over its nearest two months — a bullish structure that indicates scarce supply — while there has also been tightness in the Middle East as Oman futures surge relative to the regional Dubai benchmark.