On April 27, affected by the turmoil in the stock market, international oil prices experienced the largest drop since the banking crisis in mid-March, offsetting the increase brought about by OPEC+’s unexpected production cuts.
Rebecca Babin, senior energy trader at Canadian Imperial Bank of Commerce Private Wealth, said U.S. crude inventories fell by almost 5.1 million barrels, which is a big number.
But that hasn’t really been reflected in crude oil price action, as the market remains betting on a sharp slowdown in the U.S. economy in the second half of the year.
Crude oil market indicators in Asia have weakened in recent weeks, while refining margins have deteriorated, pointing to subdued fuel demand.
As a result, the spot Brent spread, excluding the contract expiry date, has turned into a contango for the first time since late January.
The weaker spreads suggest that traders see more supply than demand in the near term.