(Bloomberg) — Oil dipped at the open of trading in Asia as investors turned their attention to a Federal Reserve meeting this week that’s expected to signal moving toward scaling back stimulus.
Futures in New York slipped for a second session, toward $71 a barrel. Policy makers are poised to start laying the groundwork for reducing monthly asset purchases when the Fed meets for two days from Tuesday, a Bloomberg survey of economists showed. The dollar held a two-day advance, making commodities priced in the currency such as oil less attractive to investors.
Oil still capped a fourth weekly advance on Friday, with prices clawing back gains following an interruption by the sweeping spread of the delta variant of the virus that raised concerns about the demand outlook. The global market has tightened, with focus also shifting to the energy crunch playing out worldwide that may increase demand for crude.
Energy prices have rallied globally as economies emerge from the pandemic, especially natural gas, which has spurred the prospect of fuel switching. There are expectations diesel demand will expand in Asia during winter, while the use of oil to generate power in the U.S. may jump.
See also: Winter Is Coming and Europe Is Running Low on Gas: Julian Lee
The prompt timespread for Brent was 78 cents a barrel in backwardation — a bullish structure where near-dated contracts are more expensive than those further out. That compares with 61 cents a week earlier.
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