Crude oil futures fell Wednesday after three straight days of gains, after an unseasonal slowdown in gasoline demand outweighed a bullish crude inventory report.
"The market is stuck in the push-pull between the current deteriorating macro backdrop and the looming threat of a recession, pitted against the strongest fundamental oil market set-up in decades, maybe ever," RBC Capital's Mike Tran said, according to Reuters.
Shares of energy companies - easily the best performing group during Monday and Tuesday - turned lower on Wednesday, led by (APA) -6.9%, (VLO) -6.3%, (DVN) -6.1%, (FANG) -5.7%, (MRO) -5.5% and (PSX) -4.8%.
The four-week moving average of gasoline supplied fell below 9M bbl/day, or ~600K less than typical seasonal levels, according to data from the U.S. Energy Information Administration.
Below-average gasoline demand may be a warning that prices are starting to deter consumers, CIBC Private Wealth Management senior trader Rebecca Babin told Bloomberg, but the outlook for oil is still strong, "currently below seasonal averages but the key thing for crude is that it is still growing."
U.S. crude supplies have declined by more than 3M barrels in the past two weeks, as refineries that are already operating at high capacity ramped up production further.
Meanwhile, Libya's state oil company suspended shipments from two key eastern ports, and production in Ecuador has been lower due to ongoing protests.
OPEC+ is expected to rubber-stamp another modest supply increase later this week, although Saudi Arabia and the United Arab Emirates may not have the spare capacity to make up for lost Russian supply.