Oil prices increased after declining the previous day on worries that refineries will cut throughput, denting demand for crude.
(Bloomberg) — Oil prices increased after declining the previous day on worries that refineries will cut throughput, denting demand for crude.
West Texas Intermediate traded above $77 a barrel after slumping 2.2% Tuesday, tracking losses in wider financial markets as fears of a US banking crisis resurfaced. A deterioration in oil-refining profits over the last few weeks has left refiners considering cuts to processing rates.
Crude is now close to where it was before the Organization of Petroleum Exporting Countries and its allies delivered a shock production cut at the start of April. Prices had soared after the announcement, but most of the gains have since been erased as the prospect of a recession in the US and an underwhelming Chinese recovery dimmed the demand outlook.
The industry-funded American Petroleum Institute, meanwhile, reported US crude stockpiles shrank by 6.1 million barrels last week, according to people familiar with the data, although it said inventories at the Cushing, Oklahoma, storage hub rose. Official data are due later Wednesday.
“There really isn’t much going on across supply and demand to help move the needle by much,” said James Whistler, managing director at brokerage Vanir Global Markets Pte in Singapore. “We see a possible move to the downside as refining margins come under additional pressure as well some production returning after the seasonal maintenance window.”
The Federal Reserve will assess the latest reports on US jobs, inflation and consumer spending this week before its May policy meeting, which will help investors gauge the strength of the American economy. Also, some of the world’s biggest oil majors, including Chevron Corp. and Exxon Mobil Corp., will report first-quarter earnings on Friday.
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(An earlier version corrected wording in sixth graph to show Fed will assess the reports, not release them)
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