Oil prices slipped on Thursday due to weak US economic data that raised concerns about a potential global recession and demand reduction.
Brent crude futures fell by 0.9% to $84.25 a barrel, while West Texas Intermediate US crude also dropped by 0.9% to $79.88 a barrel. Despite this, benchmark prices were headed for a weekly advance after OPEC+ announced further output cuts and US oil stocks dropped.
Both Brent and WTI have gained more than 5.5% this week, headed towards three straight weeks of increase, after OPEC+ pledged voluntary production cuts.
“Crude oil’s rally paused as it battled the headwinds created by the weak economic data. This offset more positive fundamentals,” ANZ Research said in a note.
While New Zealand’s central bank raised interest rates more than expected and India is likely to follow, the US job openings in February dropped to their lowest in nearly two years, indicating that the labor market was cooling.
The slew of soft economic data soured market sentiment, stoking fears of a recession and prompting investors to adopt risk aversion strategies.
However, US crude inventories fell by 3.7 million barrels last week, about 1.5 million barrels more than forecast, according to government data. Gasoline and distillate stocks also fell more than expected, drawing down by 4.1 million barrels and 3.6 million barrels, respectively. The reduction in US oil stocks supported oil prices.
Underpinning the market, Saudi Arabia, the world’s top oil exporter, raised prices for its flagship crude for Asian buyers for a third straight month. This development points to further strength in demand in the region, according to ANZ Research.
Overall, while weak US economic data weighed on oil prices, the reduction in US oil stocks and OPEC+ cuts helped support prices.
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