By Barani Krishnan
Investing.com — Buy the rumor and sell the fact. The oil market is beginning to take more lessons from Wall Street.
Big Oil followed Big Tech’s renewed tumble on Wednesday as U.S. economic growth concerns, coupled with profit-taking on last week’s rally in energy, took crude prices down despite bullish consumption and stockpiles data released by the government.
New York-traded , or WTI, settled down $2.81, or 2.5%, at $109.59. The U.S. crude benchmark has fallen 4% over two days of trading after rising a cumulative 14.5% in four prior sessions that took it to a seven-week high of $114.90 on Monday.
London-traded settled down $2.82, or 2.5%, at $109.11.
The global crude benchmark has lost 4.5% in two days of trading after rising about 12% in four prior sessions that it took to a one-month high of $114.79 on Monday.
Oil’s selloff deepened on Wednesday despite mostly positive inventory data from the U.S. Energy Information Administration, which reported a surprise drawdown in crude stockpiles and larger-than-expected consumption in gasoline balances for last week.
“It’s what you’d call a ‘buy-the-rumor, sell-the-fact’ day,” said John Kilduff, founding partner at New York energy hedge fund Again Capital.
“Bulls in the market had been betting on some solid drawdown numbers for crude and gasoline even as the bears had expected otherwise, and some saw it fit to take the money they made off the table today,” said Kilduff. “Also, there’s incessant noise on the U.S. economy and fears of recession. All that’s weighing on stocks and markets in general.”
Stocks on Wall Street fell hard again on Wednesday, with the prized technology sector down more than 4%, as the US equity market resumed its tumble on growth concerns after a respite in recent days to the May selloff. Nasdaq has fallen some 7% for all of May, while for the year it is down 26%.
“There are gloomy forecasts from central banks, with even the Fed now targeting a softish landing which feels very much like the stage before a mild recession,” said Craig Erlam, analyst at online trading platform OANDA. “It may be time to buckle up and prepare for a very bumpy year.”
The Fed, or Federal Reserve, will raise interest rates non-stop and even slow the U.S. economy if needed to bring inflation down from current 40-year highs, the central bank’s chairman Jerome Powell said Tuesday. Record high prices of fuel, with gasoline at above $4.50 per gallon at some U.S. pumps and diesel at over $6, is accelerating inflation, and could eventually lead to demand destruction in energy as consumers find it increasingly hard to pay such prices.
U.S. economic growth for this year is likely to come in at 2.4%, some 0.8% lower than the Fed’s estimate, as the Ukraine war causes more global negative shocks than expected, S&P Global said in an outlook on Wednesday.
On the EIA data front, fell by 3.39 million barrels during the week to May 13, versus the 1.38-million barrel rise expected by analysts tracked by Investing.com. In the previous week to May 6, there was a build of 8.49 million barrels.
Among , there was a drop of 4.78 million barrels, against analysts’ consensus for a draw of 1.33 million barrels. In the prior week, there was a decline of 3.61 million barrels.
With , there was a build of 1.24 million barrels against expectations for a drop of 800,000 barrels. In the prior week, there was a drop of 913,000 barrels.