Oil’s rally evaporated as broad risk-off sentiment overwhelmed bulls’ nerve following better-than-expected inventory data.

West Texas Intermediate hit technical resistance at the 50-day moving average as equities made a sharp dip on mounting investor fears the U.S. economy will slide into a recession. Still, the smaller-than-anticipated rise in U.S. crude inventories and record exports halted prices from skidding further.

“I suspect [oil] is reacting to the weakening risk appetite and technical factors,” said Bart Melek, head of commodity strategy at TD Securities.

Crude has weakened this year as the prospect of tighter U.S. monetary policy and rising inventories counter optimism that Chinese demand will strengthen following the ending of coronavirus lockdowns in the world’s second-biggest economy.

Russian flows are also in focus as western sanctions and bans linked to the war in Ukraine tighten. Although Moscow has largely managed to keep exports going by finding new buyers, there are signs of friction, including in India, a key outlet for Russian crude.

Prices:

• WTI for April delivery slipped 34 cents to US$76.71 a barrel at 11:39 a.m in New York.
• Brent for May settlement fell 47 cents to US$83.42 a barrel.