Oil prices on Wednesday erased all gains made since Opec+ producers announced a surprise production cut earlier this month as recession concerns continued to weigh on the fuel demand outlook.
After rising nearly 1 per cent earlier, Brent, the benchmark for two thirds of the world’s oil, was trading 1.19 per cent lower at $79.81 a barrel at 5.38pm UAE time.
West Texas Intermediate, the gauge that tracks US crude, was down 0.83 per cent at $76.43 a barrel.
On Tuesday, Brent settled 2.37 per cent lower at $80.77 a barrel while WTI was down 2.15 per cent at $77.07 a barrel.
“Oil prices slumped as the dollar rallied and crude demand signals remained mostly bearish,” said Edward Moya, a senior market analyst at Oanda.
Halliburton, the largest provider of US fracking equipment, has indicated that companies are motivated to produce more oil and gas despite the volatility in energy prices.
“Commodity price volatility experienced in the first quarter does not change our view of customer demand and a tight services market,” Halliburton chief executive Jeff Miller said during a post-earnings conference call on Tuesday.
“We expect their spending to grow in 2023 and beyond.”
US crude stocks fell by 6.1 million barrels last week, according to the American Petroleum Institute.
Analysts were expecting crude stocks to drop by about 1.5 million barrels, according to Reuters.
Official data from the US Energy Information Administration will be released later on Wednesday.
Energy traders also reacted to positive commentary from American budget airline JetBlue.
Joanna Geraghty, JetBlue’s chief operating officer, said passenger demand trends were looking “robust” in the second quarter, particularly for those travelling for leisure or visiting friends and relatives during peak periods.
The International Energy Agency expects jet fuel demand to account for 57 per cent of its total forecast for global oil demand growth of about two million barrels per day this year.
Brent rose to nearly $88 a barrel this month after Opec+ producers announced voluntary crude output cuts of 1.16 million bpd on April 2.
The output curbs, which will be in place starting from May until the end of December, are aimed at supporting the stability of the oil market, producers said.
Russia, part of the 23-member alliance of crude producers, also said it would extend its output cut of 500,000 bpd until the end of this year.
However, analysts say positive news from China is key for price momentum.
“Concerns about China’s recovery aren’t going away until we see strong signs crude demand is improving,” said Mr Moya.
“Unless we see risk appetite quickly return to Wall Street, it could get uglier for crude prices.”
