Oil fell for the second session in a row as the first draw of US crude inventories this year failed to change traders’ confidence in crude amid a dovish tone from the Federal Reserve.
US inventory data from the Energy Information Administration briefly lifted futures, but the rally was extinguished by a bleak economic outlook sparked by the Fed eyeing higher and faster rate hikes. West Texas Intermediate fell nearly 2% before recouping some of its losses, piling on the commodity’s biggest drop since early January in the previous session.
With fundamentals not trending “super bullish” and sour macro sentiment, reasons to buy on the dip have not materialized, said Rebecca Babin, senior energy trader at CIBC Private Wealth.
Still, many major banks expect prices to change, helped by increased demand in China and an upcoming seasonal shift that may reduce inventories, said Brian Kessens, portfolio manager at Tortoise Capital Advisors.
“We expect refinery utilization to continue to increase and people to start driving, as early as this week, for some spring break activity,” he said. “That will continue as we head into early summer.”
Prices:
- WTI for April delivery fell 92 cents to settle at $76.66 a barrel in New York
- Brent for May delivery lost 63 cents to settle at $82.66 a barrel.
