(Bloomberg) Oil held a steep decline as demand weakness spurred speculation that refineries would cut throughput, denting demand for crude.
West Texas Intermediate traded near $77 a barrel after slumping 2.2% on Tuesday, tracking declines in wider financial markets as fears of a US banking crisis resurfaced. A deterioration in oil-refining profits over the last few weeks has left refiners considering cuts to processing rates.
Crude is now close to where it was before the Organization of Petroleum Exporting Countries and its allies delivered a shock production cut at the start of April. Prices had soared after the announcement but most of the gains have since been erased as the prospect of a recession in the US and an underwhelming Chinese recovery dimmed the demand outlook.
The industry-funded American Petroleum Institute, meanwhile, reported US crude stockpiles shrank by 6.1 million barrels last week, according to people familiar with the data, although it said inventories at the Cushing, Oklahoma, storage hub rose. Official data are due later Wednesday.
The Federal Reserve will assess the latest reports on US jobs, inflation and consumer spending this week before its May policy meeting, which will help investors gauge the strength of the American economy. Also, some of the world’s biggest oil majors, including Chevron Corp. and Exxon Mobil Corp., will report first-quarter earnings on Friday.