Oil holds gain as traders weigh signals of near-term tightness

Oil held a gain after US data showed the world’s largest economy holding up despite the fallout from the Washington-led trade war, while crude market metrics pointed to near-term tightness.Global benchmark Brent traded above $69 a barrel after advancing by more than 1% in the previous session, while West Texas Intermediate was near $67. In wider markets, strong US data eased concerns about the economy, helping to underpin a risk-on mood and global equity rally.

Crude futures, as well as those for gasoil, remain in backwardation in the nearer months of their curves, which means traders are having to pay more to secure prompt supplies. That pattern points to tight conditions even as producers’ cartel OPEC+ has been relaxing output curbs at a rapid clip.

Oil is higher so far this month, following gains in May and June. Both Morgan Stanley and Goldman Sachs Group Inc. have made the case in recent days that while global crude stockpiles have been expanding, the substantial builds have occurred in regions that don’t hold much sway in price-setting.“While inventories globally have built very significantly, stocks in the pricing centers — especially in the US — are still quite low,” Daan Struyven, head of oil research at Goldman Sachs, told Bloomberg Television. The market’s focus has shifted to downside risks to supply, he said.

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