U.S. West Texas Intermediate crude oil futures edged higher on Thursday in a mostly uneventful trade, highlighted by a benign government weekly inventories report.
Traders were trying to claw back losses from the biggest two-day setback for the start of a year in three decades. Helping to underpin the market was a shutdown of a U.S. fuel pipeline while economic concerns are capping gains. But fear of a global recession and lower demand capped gains.
Steep Plunge to Start New Year
WTI’s cumulative decline of more than 9% on Tuesday and Wednesday were the biggest two-day losses at the start of a year since 1991, according to Refinitiv Eikon data. Reflecting near-term bearishness, the nearby contracts of the U.S. benchmark traded at a discount to the next month, a situation known as contango.
Cluster of Bearish Factors Weighing on Prices
A number of factors are contributing to the weakness at the start of the new year.
The World Health Organization said data from China showed that while no new coronavirus variant has been found there, the country has under-represented how many people have died in its recent, rapidly spreading outbreak. This could show up in bearish domestic demand numbers.
In the U.S., demand concerns were also raised after a report showed U.S. manufacturing contracted further in December, dropping for a second straight month to 48.4 from 49.0 in November. According to the Institute for Supply Management (ISM),…