Oil Holds Near January Lows As Global Demand Concerns Escalate

(Bloomberg) -- Oil steadied near the lowest close since January as concerns about a US slowdown outweighed the lift from falling inventories.

Brent traded below $76 a barrel after a four-day slump, with selling pressure in that run exacerbated by trend-following algorithmic traders. West Texas Intermediate was near $72. US job growth was probably far less robust in the year through March than previously reported, adding to a string of recent signs that the world’s largest crude consumer is losing momentum.

The global oil benchmark has now lost all of its year-to-date gains as concerns about consumption — in the US as well as China — have offset the impact of supply cutbacks from OPEC+. Traders will be focusing on a policy symposium at Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell is due to speak on Friday, adding greater detail on the state of the economy.

The selloff on Wednesday came even as figures showed US crude inventories fell to the lowest since January. Distillate and gasoline holdings also dropped.

In the Middle East, the US continued to push for a cease-fire between Israel and Hamas in the 10-month conflict in Gaza. President Joe Biden and Vice President Kamala Harris spoke with Israeli Prime Minister Benjamin Netanyahu on Wednesday to discuss a deal to end the fighting.

While weak Chinese oil imports and subdued fuel demand in the US have weighed on prices, “the possibility of weather-related disruptions throughout hurricane season, as well as geopolitical risks across North Africa and the Middle East, could pose a buying opportunity around $75 a barrel for a bounce back to $80s,” Citigroup Inc. analysts including Anthony Yuen said in a note.

Timespreads, meanwhile, are showing less tight conditions. The gap between Brent’s contract for this December and the same month next year — a marker for long-term supply balances — has narrowed to $ a barrel in backwardation, compared with more than $4 a barrel at the start of last week.

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