Brent oil falls as recession fears increase fuel demand concerns

Brent crude futures for September settlement fell by 60 cents, or 0.5%, to $112.89 a barrel by 0638 GMT

oil
Reuters LONDON
3 min read Last Updated : Jul 05 2022 | 3:33 PM IST

By Bozorgmehr Sharafedin

LONDON (Reuters) -Brent oil prices slipped on Tuesday, reversing earlier gains, as concerns of a possible global recession curtailing fuel demand outweighed supply disruption fears, highlighted by an expected production cut in Norway.

Brent crude fell 38 cents, or 0.3%, to $113.12 a barrel by 0914 GMT.

U.S. West Texas Intermediate (WTI) crude climbed 84 cents, or 0.8%, to $109.27 a barrel, from Friday's close. There was no settlement for WTI on Monday because of the Independence Day public holiday in the United States.

"Oil is still struggling to break out from its current recessionary malaise as the market pivots away from inflation to economic despair," Stephen Innes of SPI Asset Management said in a note.

Investors are becoming more concerned about high inflation and a potential recession amid high prices of energy.

In South Korea, inflation in June hit a near 24-year high, adding to concerns of slowing economic growth and oil demand.

Data showed business growth across the euro zone slowed further last month, with forward looking indicators suggesting the region could slip into decline this quarter as the cost of living crisis keeps consumers wary.

However, supply concerns still loomed. Earlier in the session, WTI rose more than $3 and Brent more than $1 on reports of output disruption in Norway.

Norwegian offshore workers began a strike that will reduce oil and gas output, the union leading the industrial action told Reuters.

The strike is expected to reduce oil and gas output by 89,000 barrels of oil equivalent per day (boepd), of which gas output makes up 27,500 boepd, Norwegian producer Equinor has said.

"Oil prices are ... benefiting from the strike in Norway, so far impacting only modest volumes, and the sharp increase in Saudi official selling prices for August, suggesting that Saudi exports might not increase that much next month," UBS analyst Giovanni Staunovo said.

Saudi Arabia, the world's top oil exporter, raised August crude oil prices for Asian buyers to near record levels amid tight supply and robust demand.

The official selling price (OSP) for August-loading Arab Light to Asia was raised by $2.80 a barrel from July to $9.30 a barrel over Oman/Dubai quotes, people familiar with the matter said, close to the record high premium of $9.35 per barrel hit in May.

Oil prices also found support from signs of an easing in U.S.-China tensions.

Offering a brief respite to nervous markets was a report that U.S. President Joe Biden was contemplating rolling back some tariffs on Chinese imports, as well as news that Chinese Vice Premier Liu He had a "constructive" virtual dialogue with U.S. Treasury Secretary Janet Yellen.

(Reporting by Bozorgmehr Sharafedin in London, Additioanl reporting by Florence Tan and Muyu Xu; editing by Christian Schmollinger and Jason Neely)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

More From This Section

Topics :Brent crudeBrent crude oil

First Published: Jul 05 2022 | 3:33 PM IST

Next Story