Oil retreated for the third time in four days as further signs of a U.S. slowdown overshadowed a substantial draw in crude stockpiles.
Global benchmark Brent dropped below US$82 a barrel after closing 2 per cent lower on Wednesday. The U.S. economy stalled in recent weeks, the Federal Reserve said in its Beige Book survey, casting a cloud over prospects for energy demand. The dollar has also ticked higher, providing another headwind for commodities.
In Asia, gasoline markets are showing signs of weakness as profits from producing the fuel slump. Diesel is also lagging, with some refiners considering cuts to processing as margins decline. That's weighing on prices of crude grades like Murban, which briefly traded in a bearish contango structure. The concerns over slowing U.S. growth eclipsed a report from the Energy Information Administration that showed crude stockpiles fell 4.58 million barrels last week. Refineries operated above 91 per cent of capacity for the first time since December, although gasoline inventories expanded.
“Crude oil prices are trading lower driven by demand concerns,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S. “EIA's weekly stock report was broadly bullish but not strong enough to reverse the current negative sentiment.” Despite this week's pullback, crude is still up from a 15-month low reached in mid-March following turmoil in the banking sector. A surprise announcement by OPEC+ on production cuts and curbed Iraqi flows have underpinned some of the gains, with expectations of a rebound in Chinese demand also supportive.WTI for May delivery, which expires on Thursday, fell 1.7 per cent to US$77.80 a barrel.
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