Oil fell for a second day as traders focused on bearish economic indicators and weakness in underlying physical markets.

West Texas Intermediate touched under US$71 a barrel after earlier rising as much as 1.3 per cent. Worries about a recession and any subsequent drop in oil consumption weighed on markets, especially as persistent losses in U.S. regional banks spook macro investors, traders said. Technical selling further exacerbated declines after data showed US jobless claims increased to the highest since October 2021 and weakness in the Chinese economy.

“The continued fears of a weaker U.S. economy and disappointing re-opening fuel demand numbers from China have postponed the anticipated strength in crude,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities.

Weakness in physical crude markets and growing stockpiles at the Cushing, Oklahoma, storage hub also pushed the spread between nearby U.S. crude futures into a market structure known as contango, indicating ample supplies in the short term. 

Those factors blunted bullish trends, including signs of inflation moderating in the US, a bullish OPEC monthly outlook and a spate of supply outages from Canada to Iraq.

Prices:

• WTI for June delivery fell 1.3 per cent to $71.62 a barrel by 11:08 a.m. in New York.
• Brent for July settlement slumped 1 per cent to $75.62 a barrel.