Oil stabilized after rapidly escalating concerns about global demand triggered a sharp and significant sell-off, pushing Brent crude below $70 a barrel for the first time in over two years.
The benchmark has dropped nearly 20% this quarter due to worries that slowing growth in the US and China, the top consumers, will reduce demand amid strong and growing supply levels.
OPEC+ had to postpone an output hike which they had announced earlier because of the falling oil prices.
The International Energy Agency which was set to release an updated monthly outlook later this week, warned in August that the market could face higher inventories next year, even if the cartel halts its planned production increase.
The slump will be a tailwind for central bankers as they press home their fight against inflation, with the Federal Reserve expected to start reducing interest rates next week given easing price pressures and signs of a softening labor market.
Low oil prices will be a boon for nations that rely on crude imports to power their economies, such as China and Japan.
Brent crude which traded above $69 a barrel — suffered a volatile session on Tuesday as prices dropped more than 3% in a fresh wave of selling pressure following a steep decline last week.
Brent crude edged slightly higher on Wednesday after the American Petroleum Institute estimated that U.S. commercial stockpiles decreased by approximately 2.8 million barrels last week, according to sources familiar with the data. Official figures are expected later on Wednesday.
On the technical side, Brent’s tumble on Tuesday pushed its 14-day relative strength index — a measure of the speed and magnitude of an asset’s move — below 30, a level seen by some traders as potentially signaling a near-term rebound.
