Oil Falls as Outlook Concerns Build

Oil fell amid widespread losses on Wall Street as lackluster earnings and diminished consumer confidence prompted broad selling. 

West Texas Intermediate fell over 2% to erase the previous session’s gains, swayed by broader market movement in another low-volume session. Consumer confidence in the US for April dipped to its lowest since July, accelerating losses on Wall Street Tuesday. Many crude traders are taking a pause while they await data later this week from the Federal Reserve’s preferred wage index.

“The crude market is in wait-and-see mode with trading dominated by short term strategies as opposed to real investors,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “Longer-term investors aren’t going make real bets until there is clarity around China’s recovery and US recession.” Earnings are also likely pulling the focus to other asset classes, she added.

With traders waiting for stronger signs of demand growth to materialize, crude is hovering a few dollars above where it was just before the Organization of Petroleum Exporting Countries and its allies shook markets with a surprise output reduction at the beginning of April.

Later this week, the Federal Reserve will release the last of its major reports on US jobs, inflation and consumer spending before its May policy meeting. Additionally, some of the world’s biggest oil majors, including Chevron Corp. and Exxon Mobil Corp., will report their first-quarter earnings on Friday. 

Prices:

• WTI for June delivery fell $1.69 to settle at $77.07 a barrel in New York.
• Brent for June settlement dropped $1.96 to settle at $80.77.

Meanwhile, shipments from Iraq’s north and the country’s Kurdish region remain halted — causing some tankers to leave ports there empty and indicating a resumption isn’t likely in coming days. Russian exports remain resilient, however, despite Moscow’s earlier pledge to cut production, blunting the impact of the disruptions in the Middle East.

-With assistance from Natalia Kniazhevich.