Oil edges higher as market tightness outweighs slowdown concerns

Valve wheels and pressure gauges on water pipes at Repsol SA's Cartagena oil refining complex in Cartagena, Spain, on Thursday, Jan. 27, 2022. Oil is headed for a sixth straight weekly gain, with prices trading near a seven-year high as crude makes a roaring start to 2022. - Bloomberg

Oil edged higher on concern about near-term supply tightness, and as a raft of positive US earnings supported appetite for risk.

West Texas Intermediate rose toward $85 a barrel in early Asian trading after dropping in the prior two sessions. The Organization of Petroleum Exporting Countries and allies have agreed to curb supplies from November ahead of European Union sanctions on Russian oil flows the next month. Key market time spreads -- a gauge of tightness -- remain in backwardation, a bullish pattern.

Crude has swung in recent sessions along with broader market trends and shifts in the dollar. The US currency was slightly weaker on Tuesday, making commodities cheaper for overseas buyers. A fifth of S&P 500 companies have posted third-quarter earnings so far, with more than half topping estimates.

Crude is on course for the first monthly gain since May, although prices have shed the gains that followed Moscow’s invasion of Ukraine. Investors are weighing concerns about the impact of global economic slowdown and tighter monetary policy against the scope for a tightening of supply. They are also awaiting further details on a US-led plan to cap the price of Russian oil.