Investing.com– Oil prices fell Wednesday, as concerns over the U.S. economy following a sharp downward revision in the number of jobs sparked fresh concerns about demand overshadowing a larger-than-expected decline in domestic crude stocks.
At 13:39 ET (17:39 GMT), fell 1.5% to $76.02 a barrel, while fell 1.8% to $71.81 a barrel.
US jobs gains in year through March revised lower
The Bureau of Labor Statistics revised down March 2024’s employment gains by 818,000 positions earlier in the session, as part of the agency’s annual benchmark review of payroll data.
While that was shy than estimates for up to 1 million fewer jobs, the revision took the average number of jobs created in the 12 months through March to 174,000, down from a pace of a prior pace of 242,000.
The data renewed investor concerns somewhat about slowing economy, and crude demand, though that was tempered somewhat by expectations for the Federal Reserve to deliver its first rate cut next month.
US inventories see small build
Data from the showed that U.S. inventories fell 4.7 million barrels in the week to Aug. 16, beating expectations for a draw of only 2 million barrels.
Crude product inventories including gasoline and distillates unexpected fell by 1.6M and 3.3M, confounding expectations for builds of 0.1M and 0.04M, respectively.
The draw in products comes as refineries stepped up the pace of activity, with capacity rising to 92.3% from 91.5% the prior week.
The positive crude data helped lift some concerns about waning domestic demand as peak demand over the summer period nears an end.
Israel agrees to preliminary ceasefire deal
Media reports earlier this week indicated Israel had agreed to a preliminary ceasefire deal brought on by the U.S., although the details of the agreement were still to be negotiated.
But Hamas was reported to be critical of the new deal, and that it reflected an American bias towards Israel. Hamas also issued a statement criticizing U.S. President Joe Biden.
Hamas’ comments came as Israel continued its offensive against Gaza, which further complicated the prospect of a ceasefire.
The Israel-Hamas war has been a key point of contention for oil markets, amid persistent concerns that a spillover in the conflict could disrupt oil supplies in the Middle East.
U.S. Secretary of State Antony Blinken was seen shuttling between Egypt, Qatar and Israel earlier this week to broker a ceasefire. But no deal appeared to be reached so far.
OPEC+ in “difficult situation” – ING
Crude prices have suffered steep losses in recent sessions on persistent concerns over slowing demand in top importer China.
Since peaking above $82 on Monday last week, had shed 6.2% of its value by the end of trading on Tuesday, while the Nymex contract has dropped 7.5% in the same period.
“While weaker Chinese demand has been well reported, refinery margins around the globe have been under pressure for much of August, suggesting that these demand concerns are not isolated to just China,” said analysts at ING, in a note.
“The weakness in the oil market leaves OPEC+ in a difficult situation,” ING added.
“Currently, they are set to start gradually unwinding supply cuts from October. However, the negative sentiment in the market may make the group think twice about sticking to this plan. Unfortunately for OPEC+, the global oil balance is set to be looser next year, suggesting that plans to ease cuts through 2025 may also have to be revisited.”
(Peter Nurse, Ambar Warrick contributed to this article.)