Oil fell as broader risk-off sentiment and a smaller-than-expected decline in US stockpiles outweighed fresh glimmers of demand from a weekly government report.
(Bloomberg) — Oil fell as broader risk-off sentiment and a smaller-than-expected decline in US stockpiles outweighed fresh glimmers of demand from a weekly government report.
West Texas Intermediate fell to $71 a barrel in a choppy session, briefly paring losses after a US crude stockpile report. Nationwide inventories fell 1.5 million barrels last week, which was less than anticipated. Yet strength in gasoline demand after the US holiday helped buoy prices.
Weighing on broader market sentiment was US data that signaled companies added the most jobs in more than a year in June, which the market interpreted as being supportive of another Federal Reserve rate hike.
Crude remains about 10% lower this year, with China’s lackluster economic recovery and higher US and European interest rates weighing on the outlook for demand. The surge in borrowing costs is leading to lower global oil inventories, possibly setting prices up for spikes further down the line.
“The oil balance will likely tighten and so will financial conditions,” said Tamas Varga, an analyst at brokerage PVM. “Persistent recession worries will probably encumber but not prevent oil from marching higher.”
After announcing earlier this week that it would extend voluntary output cuts, Saudi Arabia lifted its flagship Arab Light crude price to Asia on Thursday and also boosted prices for Europe.
To get Bloomberg’s Energy Daily newsletter direct into your inbox, click here.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.