Oil is declining as traders assess the risk of recession and compare it with data on stocks in the U.S. Prices this week, oil prices are under pressure from widely falling financial markets, including the U.S., where stock futures on Wednesday point to a negative opening. Stocks in Europe are also declining. “Concerns about the demand outlook appear to be the main reason” for the decline in prices in recent days and counteract the effects of OPEC+ production cuts, says Jens Pedersen, director of oil and commodities research at Danske Bank. “For the market as a whole, including the oil market, we now need to wait and see before the Fed and European Central Bank meetings take place next week, which will set the tone.” Investors will closely watch reports this week, including U.S. employment, before the Federal Reserve’s May meeting on PREP.
Some of the world’s largest oil companies, including Exxon Mobil Corp. and Chevron Corp., will report first-quarter earnings on Friday and possibly comment on the state of the industry. With calculations in June, Brent fell by 1% to $79.96 per barrel as of 13:03 in London. WTI fell 0.2% to $76.91 per barrel. Oil declined on Tuesday, “unable to escape the broader market pressures seen yesterday, when weaker U.S. consumer confidence weighed on risky assets, while a stronger [U.S. dollar] added pressure on prices,” ING strategists wrote. However, data on stocks from the American Petroleum Institute after Tuesday’s close provided some support, according to them.
According to API data, crude oil inventories decreased by 6.1 million barrels last week, gasoline inventories fell by 1.9 million, and distillates increased by 1.7 million. Analysts surveyed by S&P Global Commodity Insight, on average, expect crude oil inventories to fall by 2.3 million barrels, gasoline — by 180,000 barrels, and distillates — by 1.2 million barrels.
