Oil falls as cloudy outlook heightens risk-off sentiment

Oil fell amid widespread losses on Wall Street as lackluster earnings and diminished consumer confidence prompted broad selling.

West Texas Intermediate fell over 2 per cent to erase the previous session’s gains, swayed by broader market movement in another low-volume session. Consumer confidence in the U.S. for April dipped to its lowest since July, accelerating losses on Wall Street Tuesday. Many crude traders are taking a pause while they await data later this week from the Federal Reserve’s preferred wage index.

“The crude market is in wait-and-see mode with trading dominated by short term strategies as opposed to real investors,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “Longer-term investors aren’t going make real bets until there is clarity around China’s recovery and U.S. recession.” Earnings are also likely pulling the focus to other asset classes, she added.

With traders waiting for stronger signs of demand growth to materialize, crude is hovering a few dollars above where it was just before the Organization of Petroleum Exporting Countries and its allies shook markets with a surprise output reduction at the beginning of April.