Oil fell at the end of the session as large crude supply balances and growing uneasiness over the trajectory of the US economy sent bulls fleeing.
Global benchmark Brent crude hit its lowest level this year, while West Texas Intermediate fell to a three-month low. The Organization of the Petroleum Exporting Countries said it sees a modest surplus next quarter during a seasonal lull in demand. After prices settled, crude oil continued its decline with lows not seen since December 2021.
The drop in the last day was “quite surprising,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. Some speculated that a large liquidation event triggered the move, but said no one knew for sure.
“Energy traders can’t find a reason to buy this dip until we get through the next round of inventory data,” said Ed Moya, senior market analyst at Oanda. “Inventories are expected to rise and this could keep oil vulnerable over the next 24 hours,”
Crude oil has had a turbulent year so far as traders juggle worries about a global economic slowdown and cautious optimism about a pick-up in demand from China. Inflation accelerated last month, raising questions about whether the Federal Reserve would feel pressured to raise rates at its meeting next week despite ongoing financial turmoil in the banking system.
Traders will be watching price action to see if the price flat is supported at recent lows. “If buyers don’t show up soon and support oil at $70, we may see an air pocket lower at $62,” said Jc O’Hara, chief technical strategist at Roth Mkm.
US inventory data is scheduled to be released on Wednesday morning. The International Energy Agency also releases its supply and demand outlook snapshot on Wednesday.
Prices:
- WTI for April delivery fell $3.47 to settle at $71.33 a barrel in New York.
- Brent for May settlement was down $3.32 at $77.45 a barrel.
