(Bloomberg) — Oil slid as investors assessed signs of lackluster US gasoline demand.
West Texas Intermediate fell near $97 a barrel, while the dollar erased an earlier loss, making commodities priced in the currency less attractive. A US report showed gasoline inventories rose more than expected last week, while a four-week average indicated high prices crimped use to just above the same time two years ago, and below every other year since 2000.
After rallying for most of the first half following Russia’s invasion of Ukraine, oil prices have been dragged lower in recent weeks by fears of recession, central bank tightening, and a broad move by investors away from commodities. Crude futures are on course in July to cap their first back-to-back monthly loss since 2020 despite signs physical markets remain tight, and prices have swung sharply at times this week.
“Crude oil price action remains choppy, with trading volumes particularly thin as is typically the case through the summer,” Citigroup analysts including Francesco Martoccia wrote in an emailed report. “Mobility data around the globe as well as high-frequency implied demand from the US and elsewhere still depict a deteriorating picture for demand.”
The softness in gasoline in particular can be seen in prices. The fuel’s premium over US crude was more than $60 a barrel at one point in June, and is now less than half that. At the same time, retail fuel prices in the US have fallen for 37 consecutive days.
Traders also tracked events in Europe as Russia’s biggest gas pipeline to the continent restarted after a 10-day maintenance period. While there had been concern that a failure to restore the flows would roil energy prices, pipeline operator Nord Stream AG said Moscow had started sending gas through.
In Asia, China’s persistence with its strategy of trying to eradicate Covid-19 has acted as a drag on energy usage and slowed regional growth. The Asian Development Bank cut its forecast for gross domestic product growth in developing Asia as Beijing’s approach to the virus creates ripple effects.
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