(Bloomberg) — Oil fell with risk-on assets ahead of a key U.S. inflation report and investors digested a mixed report on supplies from an industry group.
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West Texas Intermediate sank toward $73 a barrel after jumping 7.5% in the past three sessions as the White House said it would send crude to refill emergency reserves after maintenance work later this year. Will start buying. Gains were also supported by wildfires in Canada that have cut production.
US consumer price inflation data later on Wednesday will be closely watched for the Federal Reserve’s read on the potential interest rate path in the second half as the economy shows signs of a slowdown that could hurt energy demand. Ahead of the release, equities in Asia declined and copper erased gains.
Crude has retreated this year as Fed tightening and concerns of a possible US recession outweighed a solid physical market and supply cuts by the Organization of the Petroleum Exporting Countries and its allies. Still, Russia’s exports show little sign of abating, despite Moscow saying its production curbs have nearly hit a target of 500,000 barrels a day.
“The countdown to US CPI data – which will be a big determinant for market moves – has edged sentiment,” said Yep Jun Rong, market strategist at IG Asia Pte. Nevertheless, the trend in recent months has been for a weaker dollar following CPI and “if that holds true, oil prices may still find a catalyst for further upside,” he said.
Industry-funded reports on oil supplies ahead of official figures showed a mixed picture in the US. Nationwide oil stockpiles rose by 3.6 million barrels last week, but inventories at the key Cushing, Oklahoma hub fell, according to people familiar with the data, the American Petroleum Institute reported. The snapshot pointed to rising gasoline holdings but a drop for distillates.
Data from India, one of the region’s biggest crude importers, showed diesel consumption hit a record high last month. This follows recent data from China which showed unprecedented refining volumes.
Musabeh Al Kaabi, an executive director at Abu Dhabi National Oil Company, told Bloomberg Television on Wednesday that markets in China and Asia are at an “acceptable stage of recovery”.
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