Oil steadies after three-day drop as demand concerns multiply

Oil steadied after a three-day slump amid concern that a slowdown will hurt energy consumption, with major US banks warning of a tough outlook for 2023 and denting appetite for risk assets.

West Texas Intermediate held above $74 a barrel after futures sank almost 9 per cent in the prior three sessions to erase the year’s gains. Among the warnings, Goldman Sachs group chief executive officer David Solomon said that he saw “bumpy times ahead.”

The slump comes against a backdrop of ever-dwindling liquidity in the oil market, with declining interest stoking volatility.

Crude is limping into the end of the year, with the US benchmark heading for the first back-to-back quarterly drop since mid-2019. The latest leg down comes at a complex moment, with traders assessing the fall-out from fresh Group of Seven curbs on Russian oil, including a price cap. In addition, investors are gauging demand in China as the country moves away from its strict Covid Zero policy.

The American Petroleum Institute, meanwhile, reported that US stockpiles decreased by more than 6 million barrels last week, according to people familiar with the figures. Official data on holdings will follow later Wednesday.