Oil extends drop as US slowdown concerns eclipse stockpile draw

Oil extends drop as US slowdown concerns eclipse stockpile draw

Oil retreated for the third time in four days as further signs of a US slowdown overshadowed a substantial draw in crude stockpiles. Global benchmark Brent dropped below $83 a barrel after closing 2% lower on Wednesday. The US economy stalled in recent weeks, the Federal Reserve said in its Beige Book survey, casting a cloud over prospects for energy demand. The dollar has also ticked higher, providing another headwind for commodities.

In Asia, meanwhile, gasoline markets are showing signs of weakness as profits from producing the fuel slump. Diesel is also lagging, with some refiners considering cuts to processing as margins decline. That’s weighing on prices of crude grades like Murban, which briefly traded in a bearish contango structure. Despite this week’s pullback, crude is still up from a 15-month low reached in mid-March following turmoil in the banking sector. A surprise announcement by OPEC+ on production cuts and curbed Iraqi flows have underpinned some of the gains, with expectations of a rebound in Chinese demand also supportive.