August 16, 2022

Raven Tribune

Complete News World

Oil prices fall to their lowest level since before the Ukrainian invasion amid fears of economic recession

Oil prices fall to their lowest level since before the Ukrainian invasion amid fears of economic recession

FILE PHOTO – A PetroChina worker inspects a crane at an oil field in Tacheng, Xinjiang Uyghur Autonomous Region, China, June 27, 2018. REUTERS/Stringer At

Register now to get free unlimited access to Reuters.com

  • Bank of England raises interest rates, warns of recession risks
  • Saudi Arabia and UAE maintain oil firepower in case of winter supply crunch
  • OPEC + agrees to increase oil production target by 100,000 barrels per day
  • Tight global supply provides price support – Analysts

LONDON/NEW YORK (Reuters) – Global oil prices fell on Thursday to their lowest levels since before the Russian invasion of Ukraine in February, as traders worried that a recession later this year could stifle energy demand.

Brent crude futures fell more than 3% to $ 93.81 a barrel after touching a mid-session low of $ 93.20, the lowest level since February 21, and West Texas Intermediate (WTI) futures fell 2.7% to $88.21 a barrel, after touching its lowest level since Feb. 3 at $87.97.

Lower oil prices may come as a relief to big consuming countries like the United States and countries in Europe who are urging producers to ramp up production to make up for shortfalls and combat hyperinflation.

Register now to get free unlimited access to Reuters.com

Oil surged to more than $120 a barrel earlier in the year after a sudden rebound in demand from the darkest days of the COVID-19 pandemic combined with supply disruptions caused by sanctions imposed on major producer Russia over its invasion of Ukraine.

Thursday’s sell-off came on the heels of an unexpected rise in US crude inventories last week. The Energy Information Administration said gasoline stocks, a proxy for demand, also showed a surprise increase as demand slowed under the weight of gasoline prices near $5 a gallon. Read more

See also  Celsius withdraws CFO proposal again at $92,000 per month

Demand outlook continues to be clouded by mounting concerns about economic recession in the United States and Europe, debt distress in emerging market economies, and a tough zero-policy COVID-19 in China, the world’s largest oil importer.

“A breakout below $90 is now a very real possibility which is very impressive given how tight the market is and how little room there is to mitigate that,” said Craig Erlam, chief market analyst at Oanda in London.

“But talk of recession is getting louder, and if it becomes a reality, it will likely address some of the imbalance.”

Further pressure came on the heels of concerns that higher interest rates could slow economic activity and curb demand for fuel. The Bank of England raised interest rates on Thursday and warned of the risks of a recession.

And some analysts considered the OPEC + agreement on Wednesday to increase the production target by only 100,000 barrels per day in September, equivalent to 0.1 percent of global demand, as bearish for the market. Read more

Sources familiar with the thinking of major Gulf exporters said the two OPEC heavyweights are also ready to achieve a “significant increase” in oil production if the world faces a severe supply crisis this winter. Read more

Register now to get free unlimited access to Reuters.com

Additional reporting by Laura Sanicola and Emily Chow. Editing by Bernadette Bohm and Kirsten Donovan

Our criteria: Thomson Reuters Trust Principles.