Investing.com -- Oil prices kept to a tight range in early Asian trade on Wednesday as markets weighed signs of shrinking U.S. inventories against concerns over slowing economic growth this year, which had triggered sharp losses in the prior session.
Data from the American Petroleum Institute (API) showed that U.S. crude inventories saw a draw of 6.08 million barrels in the week to April 21, much higher than expectations for a draw of 1.67 million barrels.
The API data usually heralds a similar reading from government data due later in the day, and points to tighter crude supplies in the world’s largest oil consumer. A drop in gasoline inventories also shows some resilience in fuel demand, especially as weather conditions improve.
But signs of tighter U.S. supplies were largely offset by increasing anxiety over an economic slowdown this year, as a string of weak corporate earnings and middling economic data highlighted the growing impact of high interest rates on the world’s largest economy.
Brent oil futures fell 0.2% to $80.45 a barrel, while West Texas Intermediate crude futures fell 0.1% to $77.02 a barrel by 21:14 ET (01:14 GMT). Both contracts slid around 2% each on Tuesday, and were trading close to their weakest levels since early-March.
Resurgent fears of a U.S. banking crisis also dented sentiment, as regional lender First Republic Bank (NYSE:FRC) flagged a sharp decline in deposits, which analysts cautioned could pressure the broader banking sector.
This played into fears that an economic slowdown will largely crimp oil demand this year. Crude markets have already unwound most gains made on the back of a surprise production cut by the Organization of Petroleum Exporting Countries and allies earlier this month.
A stronger dollar - which advanced in overnight trade on rising safe haven demand - also pressured crude prices on Wednesday. Strength in the dollar makes commodities priced in the greenback more expensive for international buyers, denting demand.
Fears of slowing growth also largely offset positive demand signals from China, although an economic recovery in the country has been largely mixed so far this year.
Focus is now squarely on a Federal Reserve meeting next week, where the central bank is widely expected to hike interest rates by 25 basis points.
But any signals on the path of monetary policy will be closely watched.