Oil Slides Back to $70 as Demand Teeters for Physical Barrels

Oil fell for a second day as traders focused on bearish economic indicators and weakness in underlying physical markets.

(Bloomberg) — Oil fell for a second day as traders focused on bearish economic indicators and weakness in underlying physical markets.

West Texas Intermediate settled near $70 a barrel flip flopping early in Thursday’s session. Worries about a recession and any subsequent drop in oil consumption weighed on markets, traders said. Technical selling further exacerbated declines after data showed US jobless claims increased to the highest since October 2021 and weakness in the Chinese economy.

Prices trimmed off some of the losses in post-settlement trading after US Energy Secretary Jennifer Granholm said the the government aims to purchase oil to refill the Strategic Petroleum Reserve after a congressionally mandated drawdown ends in June.

Weakness in physical crude markets and growing stockpiles at the Cushing, Oklahoma, storage hub pushed the spread between nearby US crude futures into a market structure known as contango, indicating ample supplies in the short term.

Those factors blunted bullish trends, including signs of inflation moderating in the US, a bullish OPEC monthly outlook and a spate of supply outages from Canada to Iraq.

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–With assistance from Natalia Kniazhevich and Sri Taylor.

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