By Barani Krishnan
Investing.com -- For a second time in a fortnight, U.S. crude prices broke below the $100-per barrel support, even ending under that mark on Tuesday.
And once again, oil bulls will likely be counting on weekly U.S. inventory data to restore the market’s upside.
Brent crude, the London-traded global benchmark for oil, settled down $3.48, or 3.3%, at $102.46 a barrel, after an intraday low at $101.73.
After a 6% rally in two previous weeks on speculation that Europe was nearing a much-awaited ban on Russian oil, Brent had given back 9% week-to-date on worries that the United States might fall into a recession from aggressive rate hikes by the Federal Reserve to beat inflation growing at its fastest pace in 40 years.
But it was U.S. crude that was on the radar of oil bears.
New York-traded West Texas Intermediate, or WTI, the benchmark for U.S. crude, settled Tuesday’s trade down $3.33, or 3.2%, at $99.76.
WTI hit a session low of $98.91 earlier, its lowest since the $97.06 bottom of April 26.
The U.S. crude benchmark gained almost 8% in two previous weeks of trade to concede almost 10% within the first two days of this week.
“There's clearly a huge amount of worry about a recession in the markets at the minute as central banks continue to aggressively tighten against the backdrop of a slowing economy and a cost-of-living crisis,” said Craig Erlam, analyst at online trading platform OANDA. “There's a lot of pressure on household budgets and it's only going to intensify as the year progresses which will take its toll.”
Even so, the unwillingness of global oil exports alliance OPEC+ to turn the taps on more is keeping oil prices “very elevated but at a little over $100”, he noted, adding that it was “perhaps a sign that we should get used to these higher prices.”
Market participants were also on the lookout for U.S. weekly oil inventory data, due after market settlement from API, or the American Petroleum Institute.
The API will release at approximately 4:30 PM ET (20:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended May 6. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.
For last week, analysts tracked by Investing.com expect the EIA to report a crude stockpile drop of 457,000 barrels, versus the 1.3-million barrel rise reported during the week to April 29.
On the gasoline inventory front, the consensus is for a draw of 1.57 million barrels that would add to the 2.23 million-barrel decline in the previous week.
With distillate stockpiles, the expectation is for a drop of 1.31 million barrels versus the prior week’s deficit of 2.34 million.