Oil extended its losses on Wednesday as concerns deepened by global economic headwinds wiped out price gains as the biggest crude exporter, Saudi Arabia, pledged to increase its surprise weekend output cuts.
Brent crude futures were down 40 cents, or 0.5%, at $75.89 a barrel at 0456 GMT. West Texas Intermediate (WTI) crude futures fell another 0.5% to $71.39 a barrel, down 35 cents.
Both indicators rose more than $1 on Monday, supported by Saudi Arabia’s decision to cut production by 1 million barrels per day in July to 9 million barrels per day.
Increasingly worrying economic readings pointed to a slowdown, while fears of recession capped oil prices and hurt OPEC+’s efforts to keep prices afloat.
In the week ended June 2, gasoline inventories in the US increased by about 2.4 million barrels, while distillate stocks increased by about 4.5 million barrels, market sources said on Tuesday, based on figures from the American Petroleum Institute (API).
The unexpected increase in inventories has raised concerns about the fuel consumption of the world’s largest oil consumer, as travel demand is expected to rise, particularly over the Memorial Day weekend holiday.
Meanwhile, the U.S. Energy Information Administration (EIA) said on Tuesday that U.S. crude oil production will rise faster this year and demand growth will slow compared to previous expectations.
The market has digested the Saudi news of production cuts and investors are now reluctant to take a big position due to mixed economic forecasts and indicators in the US and China.
China’s official data on Wednesday showed that exports contracted faster than expected in May and imports fell, albeit slowly, as manufacturers struggled to find demand abroad and domestic consumption remained sluggish.
While Saudi Arabia’s voluntary cut, the kingdom’s largest in recent years, was thought that it would provide a solid base for oil prices, it does not appear to have been very successful in supporting a sustainable price increase of the 80-90s per barrel.
