Oil erases all gains on demand woes since surprise Opec+ cut

Singapore – Oil steadied on Thursday after a two-day decline of almost 6 per cent as concerns about slowing demand continued to hang over the market.

West Texas Intermediate traded above US$74 a barrel and has now given up all of the gains put on after the Organisation of Petroleum Exporting Countries and its allies blindsided markets with news of a surprise cut to output at the start of this month.

Fuel markets are showing weakness and some refiners in Asia are considering reducing processing as margins shrink.

Oil has been swinging in tandem with wider equity markets in recent sessions as investors respond to the conflicting drivers of tighter United States monetary policy and a resurgent China. Traders are also watching energy flows from Russia and the fallout from sanctions for

its war in Ukraine,

with researchers saying there has likely been widespread breaches of a price cap by Asian buyers.

“Falling refining margins and worries over the recovery in China’s commodity-intensive economy have continued to weigh on oil,” said Mr Vivek Dhar, director of mining and energy commodities research at Commonwealth Bank of Australia.

Slowdown fears and concerns over the health of the US banking system added to the bearish sentiment, he added.

Concerns over slowing demand overshadowed a largely bullish US stockpile report. The nation’s crude inventories shrunk by 5.05 million barrels last week – a second weekly draw – while petrol and distillate supplies declined. BLOOMBERG