Oil prices continued to decline on Wednesday as wavering demand and uncertainty around economic growth overshadowed shrinking U.S. stockpiles. West Texas Intermediate, the U.S. benchmark, fell below $80 per barrel at Tuesday’s close.
Demand continues to waver as Russian oil continues to flow into the already well-stocked Asian market. In an effort to remain competitive, local refiners in Asia have been considering reducing production runs.
“Lingering concern that further US interest rate cuts could tip economies into recession and lead to slower growth is overtaking the supply focus of the OPEC cuts,” Ed Bell, senior director for market economics at Dubai-based lender Emirates NBD PJSC observed. Bell was referring to the decision of OPEC+ and its allies last month to cut their daily output.
OPEC+’s announcement saw oil rebound after mid-March’s banking turmoil, while lower Amercian inventory levels also contributed to oil’s price rise. The American Petroleum Institute reported last week that weekly storage levels as the Cushing, Oklahoma hub had dropped yet again, contributing to the longest run of declines in more than a year.