Oil fell for the first time in almost two weeks as disappointing US economic data ignited fears of a recession and sparked a sell-off across Wall Street.
West Texas Intermediate reversed course after hitting the highest intraday price since early December, falling almost 1%. Demand data out of China boosted oil prices at the start of the session but the commodity’s surge hit a roadblock when equities turned sharply lower and the dollar rebounded.
Business equipment production and retail sales slowed in the US, reviving slowdown concerns even as China rebounds from Covid-related losses. While global oil markets are set to face a bigger surplus than expected in the first quarter, global consumption is on track to reach a record-daily average this year with China leading the way, the International Energy Agency said in its latest outlook.
“Oil’s rally could not last after energy traders saw broad weakness across large parts of the US economy,” said Ed Moya, senior market analyst at OANDA. “Crude-demand concerns are growing as the consumer is much weaker than expected and as the manufacturing sector is plunging.”
- WTI for February delivery fell 70 cents to settle at $79.48 a barrel in New York.
- Brent for March settlement slipped 94 cents to $84.98 a barrel.
Reinforcing the IEA’s bullish demand outlook, Saudi Aramco said it was optimistic that consumption will increase. Traders are also waiting for signs of Russia’s production path when sanctions on refined fuels take effect early next month.