Oil prices resumed their slide on Wednesday on investor worries about the ailing state of the global economy, the prospect of central bank interest rate hikes, and increased restrictions to curb COVID-19 in China.
Brent crude futures for October, due to expire on Wednesday, were down $3.38 at $95.93 U.S. a barrel following Tuesday’s $5.78 loss. The more active November contract was down $2.70, or 2.76%, at $95.14 U.S. a barrel.
U.S. West Texas Intermediate (WTI) crude futures were down $2.61, or 2.9%, at $89.03, after sliding $5.37 in the previous session on recession fears.
The price swings since the Ukraine conflict began six months ago have rattled hedge funds and speculators and thinned trading, which in turn has made the market whipsaw even more, as seen on Tuesday.
China’s factory activity extended declines in August as new COVID infections, the worst heatwaves in decades and an embattled property sector weighed on production, suggesting the economy will struggle to sustain momentum.
Some bullish factors provided a floor to prices. Data from the American Petroleum Institute (API) showed gasoline inventories fell by about 3.4 million barrels, while distillate stocks, which include diesel and jet fuel, fell by about 1.7 million barrels for the week ended Aug. 26.
The drawdown in gasoline stockpiles was nearly triple the 1.2-million-barrel drop that eight analysts polled by Reuters had expected on average. For distillate inventories they had expected a drop of about one million barrels.
However, API data showed crude stocks rose by about 593,000 barrels, against analysts’ estimates of a drop of around 1.5 million barrels.
