Even though a report showed that U.S. crude stocks fell more than expected last week, oil prices went down again on Wednesday. Weak economic data in the world’s biggest economy has raised fears of a recession there.
At 10:54 a.m. EDT (1454 GMT), the price of a barrel of Brent oil fell by $1.08, or 1.3%, to $79.69. U.S. West Texas Intermediate oil dropped 76 cents, or 1%, to $76.31.
The Energy Information Administration (EIA) said that crude oil stocks in the U.S. dropped by 5.1 million barrels last week, bringing the total down to 460.9 million barrels. This was a much bigger drop than the 1.5 million-barrel drop that experts in a Reuters poll had predicted.
The EIA said that petrol stocks went down by 2.4 million barrels to 221.1 million barrels and diesel stocks went down by almost 600,000 barrels to 111.5 million barrels.
Matt Smith, lead oil analyst for the Americas at Kpler, said, “Despite today’s big drop in crude, prices remain in the red as worries about demand and fears of a recession overshadow more positive EIA data points.”
Oil prices have lost all of their gains since the Organisation of the Petroleum Exporting Countries (OPEC) and its producer partners, such as Russia, announced in early April that they would cut their output even more until the end of the year. This group is called OPEC+.
On Wednesday, Russian Deputy Prime Minister Alexander Novak said that OPEC+ is still a good way for oil markets around the world to work together.
Oil prices fell more than 2% on Tuesday because of ongoing economic worries and predictions of more interest rate hikes, which could slow the growth of fuel demand. This is happening even though there are signs that short-term consumption gains are getting better.
As worries grew in April, shopper confidence in the U.S. fell to its lowest level in nine months. This makes it more likely that the economy will go into recession this year.
Stephen Brennock of PVM Oil said, “This (data) will give more weight to claims that the U.S. economy is getting closer to a recession.”
Investors were also worried that if central banks raised interest rates to fight inflation, it could slow down economic growth and reduce the need for energy in the United States, Britain, and the European Union.
Rates are likely to go up at the next meetings of the U.S. Federal Reserve, the Bank of England, and the European Central Bank. On May 2 and 3, the Fed meets.
The losses were limited, though, especially on WTI, by a report that showed U.S. oil stocks had gone down.