Despite a larger-than-expected draw in U.S. crude oil and fuel stocks, oil prices fell slightly on Wednesday as the market weighed worsening economic prospects against the anticipated decline in U.S. crude inventory and plans by OPEC+ producers to reduce output.
According to the Energy Information Administration, crude inventories fell by a more-than-expected 3.7 million barrels in the last week to 470 million barrels. Gasoline and distillate stocks also fell by 4.1 million barrels and 3.6 million barrels, respectively. However, data showing cooling economic conditions weighed against higher demand for crude and fuel.
U.S. job openings in February fell to their lowest level in nearly two years, indicating a cooling labor market. This data raises concerns about healthy economic expansion, as weak economic data from China and the euro zone exacerbate demand fears.
“The present raises concerns about healthy economic expansion as Chinese, euro zone and U.S. manufacturing activity slowed last month,” said Tamas Varga of oil broker PVM.
The record Russian diesel flows to the Middle East in March and the sluggish performance of middle distillates contracts also slowed any attempts to push crude oil prices meaningfully higher.
This week, oil prices were underpinned by voluntary cuts pledged by OPEC+. The group includes members of the Organization of the Petroleum Exporting Countries and allies, including Russia.
“The decision by OPEC+ to voluntarily cut crude supplies from May onwards has come as a surprise to many, considering that the global crude balance was already expected to become increasingly tight over the summer months, something that will certainly help keep crude prices supported,” Kpler crude analyst Johannes Rauball said.
While the market weighed these factors, Brent crude oil fell 49 cents, or 0.6%, to $84.45 a barrel while the West Texas Intermediate U.S. crude fell 58 cents, or 0.7%, to $80.13 a barrel.