Oil falls 2% on recession fears, swelling US fuel stocks
Reuters
Published Apr 19, 2023 08:39PM ET
Updated Apr 20, 2023 03:17PM ET
By Laila Kearney
NEW YORK (Reuters) -Oil prices slid by about $2 a barrel to their lowest level since late March on Thursday, dragged lower by fears a possible recession could dent fuel demand and after a rise in U.S. gasoline inventories.
Brent crude futures settled at $81.10 a barrel, shedding $2.02, or 2.4%. West Texas Intermediate crude (WTI) futures settled at $77.29 a barrel, losing $1.87, or 2.4%.
Both benchmarks fell 2% on Wednesday and are at their lowest since just before a surprise OPEC+ production cut announcement.
"At the end of the day, one of the big reasons why we're sliding is fear of recession," said Bob Yawger, executive director of energy futures at Mizuho.
The number of Americans filing new claims for unemployment benefits increased moderately last week, indicating the labor market was slowing after a year of interest rate hikes by the U.S. Federal Reserve, and fanning concerns about a slowdown in fuel demand.
Gasoline inventories jumped unexpectedly last week by 1.3 million barrels to 223.5 million barrels, the U.S. Energy Information Administration said in its report on Wednesday. [EIA/S] [API/S]
Implied gasoline demand also fell 3.9% from year-ago levels to 8.5 million barrels a day. U.S. crude stockpiles, meanwhile, dropped by 4.6 million barrels, but analysts said that decline could be short-lived.
"Although yesterday's EIA crude stock draw of more than 4.5 million barrels looked supportive, all of the reduction was related to a spike in crude export activity that could easily be reversed in next week's EIA," said Jim Ritterbusch of consultancy Ritterbusch and Association.
Easing some concern about a rate hike-induced recession in the world's largest oil consuming nation, economists polled by Reuters expected the Fed to end its tightening with a final 25 basis point rate rise in May.
In Britain, persistent double-digit inflation has bolstered expectations of a further Bank of England rate hike.
On the supply side, oil loading from Russia's western ports in April is likely to rise to the highest since 2019, trading and shipping sources said.
Pakistan has placed its first order for discounted Russian crude under a new deal which could cover 100,000 barrels per day, the country's petroleum minister said.
Get The News You Want
Also weighing on crude prices, equity markets, which often move in tandem with oil prices, were down after disappointing results from Tesla (NASDAQ:TSLA) and other companies.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.