Oil dipped below US$80 a barrel in London for the first time since March as investors considered the outlook for global demand amid concerns over the health of the economy.

Crude is now close to where it was before the Organization of Petroleum Exporting Countries and its allies announced a shock production cut earlier this month. A deterioration in oil-refining profits over the last few weeks has left companies considering lower processing rates, and key indicators in the Asian crude market have continued to weaken.

Prices have this week also swung with wider financial markets, with U.S. equity futures wavering on Wednesday and stocks in Europe dropping. A U.S. industry group, however, reported a large drop in nationwide crude stockpiles, adding some positivity for oil earlier in the day.

 “Concerns about the outlook for demand seems to be the main culprit” for lower prices in recent days, and are countering the effects of lower OPEC+ output, said Jens Pedersen, director of oil and commodities research at Danske Bank. “For the market in general, including the oil market, it’s now wait-and-see before next week’s Fed and European Central Bank meetings which will set the tone.”

Investors will closely track reports this week including on U.S. jobs, before the Federal Reserve’s May policy meeting. Some of the world’s biggest oil majors, including Exxon Mobil Corp. and Chevron Corp., are scheduled to report first-quarter earnings on Friday and potentially provide commentary on the health of the industry.

Prices:

• Brent for June settlement fell as much as 1 per cent to $79.96 a barrel, and was 0.6 per cent lower as of 1:03 p.m. in London
• WTI for the same month dropped 0.2 per cent to $76.91 a barrel
• It fell 2.2 per cent on Tuesday to settle at the lowest level since March 31