FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base
By Laila Kearney
NEW YORK (Reuters) -Oil prices slid by about $2 a barrel to their lowest level since late March on Thursday, dragged lower by fears a possible recession could dent fuel demand and after a rise in U.S. gasoline inventories.
Brent crude futures were down $1.98, or 2.4%, to trade at $81.14 a barrel at 12:56 p.m. EDT (1656). West Texas Intermediate crude (WTI) futures dropped $2.05, or 2.6%, to $77.11 a barrel.
Both benchmarks fell 2% on Wednesday and are at their lowest since late March, just before a surprise OPEC+ production cut announcement.
Equities markets, which often move in tandem with oil prices, were down after disappointing results from Tesla (NASDAQ:TSLA) and other companies.
“At the end of the day, one of the big reasons why we’re sliding is fear of recession,” said Bob Yawger, executive director of energy futures at Mizuho.
The number of Americans filing new claims for unemployment benefits increased moderately last week, indicating the labor market was slowing after a year of interest rate hikes by the U.S. Federal Reserve.
Easing some concern about a rate hike-induced recession in the world’s largest oil consuming nation, economists polled by Reuters expected the Fed to end its tightening with a final 25 basis point rate rise in May.
In Britain, persistent double-digit inflation has bolstered expectations of a further Bank of England rate hike.
U.S. crude stockpiles fell by 4.6 million barrels as refinery runs and exports rose, while gasoline inventories jumped unexpectedly, according to the U.S. Energy Information Administration. [EIA/S] [API/S]
Implied gasoline demand also fell 3.9% from year-ago levels to 8.5 million barrels a day.
“Although yesterday’s EIA crude stock draw of more than 4.5 million barrels looked supportive, all of the reduction was related to a spike in crude export activity that could easily be reversed in next week’s EIA,” said Jim Ritterbusch of consultancy Ritterbusch and Association.
Oil loading from Russia’s western ports in April is likely to rise to the highest since 2019, trading and shipping sources said.
Pakistan has placed its first order for discounted Russian crude under a new deal which could cover 100,000 barrels per day, the country’s petroleum minister said.