(Bloomberg) -- Oil held a two-day decline as concerns over physical demand and the possible restart of some flows from Iraq offset a plan by the US that it could start refilling the Strategic Petroleum Reserve after June.
West Texas Intermediate was little changed below $71 a barrel after dropping almost 4% over the previous two sessions. The physical market is showing signs of weakness amid poor refining margins and lackluster buying in some areas. That comes as the two biggest economies showed further evidence of cooling this week, with US jobless claims rising and China’s recovery waning.
In the Middle East, Iraq said it’s resuming oil exports through the port of Ceyhan in Turkey on Saturday, according to the country’s oil minister.
Crude has retreated by about 15% over the past month as the US economy moved closer to recession and China’s rebound continued to disappoint, threatening energy demand. That’s outweighed the lift from supply cuts announced by the Organization of Petroleum Exporting Countries and its allies.
“Prices may hit a floor soon, with low prices providing an entry point for many market players to put on new long positions,” said John Driscoll, director of JTD Energy Services Pte. Many people are waiting for a “dip-buying opportunity given that a a modest recovery is likely in the second half, he said.
On Thursday, Energy Secretary Jennifer Granholm told lawmakers the US hopes to start refilling the nation’s strategic reserves after a congressionally-mandated drawdown ends next month. Earlier this week, the administration said it planned to begin purchasing oil for the SPR after finishing maintenance.