Oil stabilizes amid economic concerns, despite the OPEC + announcement of production cuts
Oil ended Wednesday’s trading unchanged, despite a larger-than-expected drop in US crude and fuel inventories, as the market evaluated the deteriorating economic prospects in light of the OPEC + group’s plan to cut production.
Brent crude futures rose five cents, or 0.1 percent, to settle at $84.99 a barrel, while US West Texas Intermediate crude fell ten cents, or 0.1 percent, to $80.61 a barrel.
Government data showed that crude inventories fell by 3.7 million barrels last week, more than the expected decline of about 1.5 million barrels. Gasoline and distillate inventories fell by 4.1 million barrels and 3.6 million barrels, respectively.
“Investors may be cautious after the strong rise in prices this week,” said Giovanni Staunovo, an analyst at UBS.
Prices jumped more than 6 percent on Monday after the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, announced a voluntary production cut.
“The decision of the OPEC + group to cut crude supplies voluntarily came as a surprise to many, given that the global crude market was already expected to witness increasing scarcity during the summer months, which will support prices,” said Johannes Raubal, oil analyst at Kpler.
New job vacancies fell in the United States in February to their lowest level in nearly two years, indicating a slowdown in the labor market.
Craig Erlam, senior market analyst at OANDA, said the data “could be the first sign of weakness in the US labor market… Without that (the US central bank) will have great difficulty justifying stopping the tightening cycle.”
