Top Stories
Oil slips to six-month low as recession fears weigh
Global Banking & Finance Review®
Company
By Alex Lawler
LONDON (Reuters) -Oil hit a six-month low on Wednesday after a brief rally as concerns about the prospect of a global recession that would weaken demand overshadowed a report showing lower U.S. crude and gasoline stocks.
Figures on Wednesday did little to improve the economic backdrop, showing British consumer price inflation jumped to 10.1% in July, its highest since February 1982, intensifying a squeeze on households.
Brent crude fell as low as $91.51, the lowest since February, and by 1331 GMT was up 20 cents, or 0.2%, at $92.54. U.S. West Texas Intermediate (WTI) crude rose 57 cents, or 0.7%, to $87.10.
“The oil market is struggling to shake off recession fears, and there is little to suggest that this will change any time soon,” said Stephen Brennock of oil broker PVM.
Earlier, prices gained support from a report showing lower U.S. crude and fuel stocks. Crude stocks fell about 448,000 barrels and gasoline by about 4.5 million barrels, said sources citing American Petroleum Institute figures on Tuesday.
Official inventory data from the Energy Information Administration is out at 1430 GMT. [EIA/S]
Oil has soared in 2022, coming close to an all-time high of $147 in March after Russia’s invasion of Ukraine exacerbated supply concerns. Prices have fallen since as those concerns were edged out by the prospect of recession.
“There are growing downside risks as a result of the growth outlook and ongoing uncertainty around Chinese COVID restrictions,” said Craig Erlam of brokerage OANDA.
An exodus of participants, especially hedge funds and speculators, has made daily price swings far greater than in previous years.
On the oil supply front, the market is awaiting developments from talks to revive Iran’s 2015 nuclear deal with world powers, which could eventually lead to a boost in Iranian oil exports if a deal is reached.
The European Union and United States said on Tuesday they were studying Iran’s response to what the EU has called its “final” proposal to save the deal.
(Additional reporting by Yuka Obayashi in Tokyo and Emily Chow in Kuala Lumpur; Editing by David Evans, Kirsten Donovan)
Brent crude is a major trading classification of crude oil originating from the North Sea. It serves as a benchmark for pricing oil globally and is used to price two-thirds of the world's oil.
West Texas Intermediate (WTI) is a grade of crude oil used as a benchmark in oil pricing. It is sourced from the U.S. and is known for its high quality and low sulfur content.
Consumer price inflation measures the rate at which the general level of prices for goods and services is rising, indicating a decrease in purchasing power. It is often expressed as a percentage.
Crude oil stocks refer to the amount of crude oil stored in tanks and reserves. These stocks are monitored to assess supply levels and predict price movements in the oil market.
A recession is a significant decline in economic activity across the economy that lasts for an extended period, typically visible in GDP, income, employment, manufacturing, and retail sales.
Explore more articles in the Top Stories category
