Oil, whipsawed by volatile equity markets, fell the most since mid-March when a banking crisis battered the commodity, nullifying gains from a surprise production cut by OPEC+. 

West Texas Intermediate swung in almost a $3 range on Wednesday, settling at the lowest level since late March, thereby erasing all of the gains that came after OPEC and its allies announced a shock production cut. The commodity mostly ignored a bullish inventory report from the Energy Information Administration and instead tracked wild equity swings.  

“This is a strong number,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth, referring to the 5.1 million barrel drop in US crude inventories. “But it is not really being reflected in price action because the market wants to see the China-demand story play out and is still betting the US slows down significantly in the second half.”  

Asian crude market indicators have weakened in recent weeks while oil-refining profits have deteriorated, signaling lackluster fuel demand. Consequently, Brent’s prompt-spread flipped into contango for the first time since late January, excluding contract expiration dates. The weakening spread indicates traders see near-term supply outweighing demand.

Despite the pullback, crude is still up from a 15-month low reached in mid-March following turmoil in the banking sector. With outlook concerns roiling markets, traders will be watching US economic reports later this week for any clues to the Federal Reserve rate-hike path ahead of its May policy meeting.