(Bloomberg) -- Oil steadied after sliding below $100 a barrel on Tuesday as escalating fears about an economic slowdown rippled across markets.
West Texas Intermediate plunged about 8% in the previous session to close at the lowest level in three months. US inflation data for June is due Wednesday and economists project it surged to a fresh pandemic peak that will keep the Federal Reserve geared for another big interest-rate hike.
Oil has given up the bulk of its gains seen in the wake of Russia’s invasion of Ukraine, which drove prices above $130 a barrel in March. A stronger dollar and China’s rising Covid cases have added to the pressure. The International Energy Agency will provide its snapshot of the market later Wednesday.
“Weaker macro sentiment is driving the market at the moment and is likely to continue to do so in the short term,” said Warren Patterson, Singapore-based head of commodities strategy at ING Groep NV. “This suggests the potential for further downside, but we believe it will be fairly limited, given the supportive fundamentals. The global market is still tight.”
Concerns over an economic slowdown have overshadowed tight physical crude markets. OPEC’s first outlook for 2023 suggests that there will be no relief for squeezed consumers, with more oil needed from the group even though most members are already pumping flat out.
US President Joe Biden has repeatedly called on OPEC to pump more and is scheduled to visit Saudi Arabia this week during a tour of the Middle East. The kingdom along with the United Arab Emirates are the only cartel members with significant volumes of unused production capacity.
The American Petroleum Institute reported that US crude stockpiles rose by 4.76 million barrels last week, according to people familiar with the figures. The Energy Information Administration will report data on Wednesday.