Oil declined amid persistent concerns over the demand outlook following a short-lived bounce on Saudi Arabia’s pledge to cut more supply.
West Texas Intermediate futures dropped toward $71 a barrel after closing 0.6% lower Tuesday. The US sees its oil consumption this year growing at half the rate of 2022 due to waning diesel use, according to a government report. Trade data from China on Wednesday also reflected weaker global demand.
Oil has lost around 12% this year as a sluggish Chinese recovery and aggressive monetary policy from the Federal Reserve weighed on demand. Russian crude flows are still high even after the nation said it would reduce supply, spurring Saudi Arabia to call on Moscow to be more transparent with its data.
Chinese exports fell for the first time in three months in May, according to official data released Wednesday. While figures may have been impacted by the base of comparison from a year ago, it also reflects weaker global demand.
“The demand outlook remains an overriding theme,” said Yeap Jun Rong, a Singapore-based market strategist for IG Asia Pte.
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The industry-funded American Petroleum Institute reported US crude stockpiles at the hub of Cushing, Oklahoma, increased by 1.5 million barrels last week, according to people familiar with the figures. Nationwide inventories fell, the API said. Government data is due later Wednesday.
