Oil Prices Continue to Fluctuate as Markets Search for Equilibrium and Demand Remains Uncertain

Oil markets are experiencing a rise in prices, reaching above $83 a barrel after earlier losses. This is due to a weaker dollar that boosts commodities priced in the currency and strengthening equities markets that provide support to crude futures. Despite this, market sentiment was dampened by a US inflation measure, and oil markets are still searching for an equilibrium price due to the lack of significant geopolitical news or data releases.

Crude prices have remained elevated this year, thanks to supply cuts from OPEC+ and tensions in the Middle East. However, recent highs have been retraced as geopolitical risks have decreased. Options continue to show a bearish tilt toward puts, and the US Oil Fund, the largest oil exchange-traded fund, experienced its largest daily outflow on record.

The demand outlook for oil remains uncertain, with weakness seen in some refined products. Profit margins for converting crude oil into diesel in Asia are near their lowest level in almost a year. The market continues to be influenced by a variety of factors, making it challenging to predict future price movements.