(Updates throughout with settlement prices)
By Barani Krishnan and Liz Moyer
Investing.com — Oil longs are finding the second quarter a lot harder than they thought.
After a gain of more than 20% in the first quarter that resulted in a bull market, crude prices have basically spent the past month-and-a-half range-bound, experiencing a greater number of plunges than spikes.
Often, the slumps had more to do with Covid or global macro situations than being oil-centric — though one could argue that they were related.
Wednesday was a classic example with a global markets selloff triggered by China’s crypto-crackdown handing oil its worst day in three weeks.
An explosion of coronavirus cases in Asia — particularly in countries that seem to have beaten the pandemic, such as Singapore, Taiwan and Vietnam — weighed heavily on energy market sentiment too as questions rose on the mobility of those economies going ahead. India, the world’s third biggest oil consumer, meanwhile remains the fastest growing Covid hotspot with daily records of new infections and deaths.
“Oil is totally, totally not out of the woods yet as far as Covid is concerned,” said John Kilduff, founding partner at New York-based energy hedge fund Again Capital. “And with risk-off days like today, you can bet on more volatility and range-bound trades than enduring vertical action.”
New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled down $2.13, or 3.3%, at $63.36 per barrel. It earlier hit a 3-week low of $61.98.
London-traded Brent, the global benchmark for crude,settled down $2.03, or almost 3%, at $66.66. Brent slid to a 3-week low of $65.30 intraday.
The slide came despite better-than-forecast oil supply-demand data for last week released by the U.S. Energy Information Administration.
Crude oil inventories rose 1.321 million barrels last week, compared with analysts' expectations for a build of 1.623 million barrels, the EIA announced.
Distillate stockpiles, which include diesel and heating oil, fell 2.324 million barrels against forecasts for a draw of 386,000 barrels.
Gasoline inventories fell 1.963 million barrels, compared with expectations for a decline of 886,000 barrels.
Exports of U.S. crude virtually doubled from 1.8 million barrels per day last week to 3.3 million, offsetting imports that grew by 900,000 barrels pef
Oil has been under pressure since the week began on speculation that U.S. sanctions on Iranian crude might be off soon if Tehran gets the nuclear deal it has been negotiating for with world powers over the past month.
Data on Tuesday showing surprisingly weak U.S. housing starts for April also indicated that builders were slowing down activity to tame an overpriced lumber market, spawning concerns that other sectors of the economy might see consolidation too.