Oil fell from its highest closing level in four months in New York as signs of a slowing global economy stirred concerns about fuel demand.
West Texas Intermediate futures retreated 1.3%. European equities dropped after data showed Germany’s contracting manufacturing sector held back euro-zone growth. The yield on the nation’s 10-year bonds — Europe’s benchmark — dropped below zero for the first time in two years, underscoring fears about the region. A stronger U.S. dollar also dimmed the appeal of commodities.
“There’s enough to worry about,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “The U.S. dollar, weaker sentiment, recession fears.”
Crude is nonetheless set for a third weekly increase, having climbed above $60 a barrel in New York on March 20 for the first time this year, as OPEC and its allies reaffirmed their commitment to supply cutbacks. While disruptions in Venezuela and Iran also have squeezed supplies, uncertainty surrounding ongoing trade talks between the United States and China is keeping investors wary.
WTI for May delivery was at $59.22 a barrel, down 76 cents, on the New York Mercantile Exchange on March 22. It settled at $59.98 a barrel March 21, the highest closing level since Nov. 9.
Brent for May settlement fell 97 cents to $66.89 a barrel on the London-based ICE Futures Europe exchange. It lost 0.9% on March 21, dropping for the first time in four days. Prices are 0.4% lower this week. The global benchmark crude was at a premium of $7.68 to WTI.
The U.S. Energy Information Administration showed crude stockpiles last week dropped by the most since July, defying analysts’ forecasts for a 1.75 million-barrel increase. However, they still are near the five-year average for this time of the year, suggesting growing shale output still risks undermining OPEC and its partners’ efforts to cap production.
Saudi Arabian Energy Minister Khalid Al-Falih said OPEC+ remains committed to curbing output when the Joint Ministerial Monitoring Committee met March 18. Still, Russia and Iraq, the coalition’s other major suppliers, suggested the group should monitor the market until May or June before making a decision on extending the cuts through the year as developments in Venezuela and Iran may influence supply.