Oil dropped alongside broader equity markets as investors awaited U.S. inventory data and worried a global slowdown will curtail consumption.
West Texas Intermediate slipped under US$80 a barrel as mixed company earnings and weaker business activity spurred concerns about the U.S. economy. While there’s an expectation that China’s oil demand will rise after it ditched restrictive COVID rules, uncertainty lingers over the strength of the rebound.
Markets are also largely expecting a U.S. stockpile build in the weekly government data due later Wednesday. AlphaBBL reported that inventories at the largest storage hub in Cushing, Oklahoma, would rise the most since April 2020.
“It looks like the market is just taking a breather after the rally which followed Chinese growth optimism,” said Ole Sloth Hansen, head of commodities research at Standard Chartered.
Crude is largely unchanged so far this month after a weak start to the year with recession fears running through the market. The outlook for China and a weaker dollar — which makes commodities priced in the currency more attractive — have helped oil claw back some ground.
Prices:
- WTI for March delivery fell 31 cents to US$79.82 a barrel 10:08 a.m. in New York.
- Brent for the same month dropped 50 cents to US$85.63 a barrel.
More uncertainty lies ahead with sanctions and price caps on Russian petroleum products set to kick in next month. That, coupled with refinery outages in the U.S. due to a cold snap in the north, had been causing oil product cracks to rally in recent days.
