Oil Slips as Recession Fears Offset Market Optimism for China’s Demand Recovery

Storage tanks are seen at Marathon Petroleum's Los Angeles Refinery, which processes domestic & imported crude oil into California Air Resources Board (CARB), gasoline, diesel fuel, and other petroleum products, in Carson, Calif., on March 11, 2022. Bing Guan/Reuters

LONDON—Oil slipped on Wednesday, adding to a decline in the previous session, as global recession worries edged out optimism for a demand recovery in China.

Crude has rallied in 2023, with global benchmark Brent crude topping $89 a barrel this week for the first time since early December, on the ending of China’s COVID-19 controls and hopes that the rise in U.S. interest rates will soon taper off.

“Whether or not oil prices can resume their march higher will depend on how quickly China’s crude demand bounces back this quarter,” said Stephen Brennock of oil broker PVM.

Brent crude was down 1 cent to $86.12 a barrel by 10:23 GMT after declining 2.3 percent in the previous session. West Texas Intermediate (WTI) U.S. crude slipped 16 cents, or 0.2 percent, to $79.97, after a 1.8 percent drop on Tuesday.

Official U.S. crude inventory data from the U.S. Energy Information Administration is out at 15:30 GMT.

Weighing on oil were concerns about an economic slowdown. U.S. business activity contracted in January for the seventh straight month, figures showed on Tuesday.