(Bloomberg) — Oil prices stabilized near their lowest close since January as concerns about a slowing U.S. economy outweighed a boost from falling inventories.
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Brent was trading around $76 a barrel after a four-day slump, with selling pressure exacerbated by trend-following algorithmic traders during that period. West Texas Intermediate was below $72. U.S. job growth in the year to March was likely far less robust than previously reported, adding to a number of recent signs that the world’s largest crude consumer is losing momentum.
The global oil index has now given back all its year-to-date gains as concerns about consumption – in both the US and China – have offset the impact of OPEC+ production cuts. Traders will focus on a policy symposium in Jackson Hole, Wyoming, where Federal Reserve Chairman Jerome Powell will speak on Friday and provide more detailed information on the state of the economy.
Wednesday’s sell-off came despite U.S. crude oil inventories falling to their lowest level since January. Distillates and gasoline inventories also declined.
In the Middle East, the United States continued to push for a ceasefire between Israel and Hamas in the decade-long conflict in the Gaza Strip. President Joe Biden and Vice President Kamala Harris spoke with Israeli Prime Minister Benjamin Netanyahu on Wednesday to discuss an agreement to end the fighting.
While weak Chinese oil imports and subdued fuel demand in the U.S. weighed on prices, “the possibility of weather-related disruptions during hurricane season as well as geopolitical risks in North Africa and the Middle East could provide a buying opportunity at around $75 a barrel for a recovery to $80,” Citigroup Inc. analysts including Anthony Yuen wrote in a note.
The timeframes are now showing less strained conditions. The gap between the Brent contract for this December and the same month next year – an indicator of long-term supply balances – has narrowed due to backwardation to $2.77 per barrel, compared to more than $4 per barrel at the beginning of last week.
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