By Zhang Mengying
Investing.com – Oil was down on Thursday morning in Asia as investors are worried that tightening monetary policy could trigger a recession and dampen fuel demand.
Brent oil futures fell 2.31% to $109.16 by 12:03 a.m. ET (0403 GMT) and crude oil WTI futures divided 2.61% to $103.42.
Investors are concerned about a recession caused by tightening monetary policy. U.S. Federal Reserve is not trying to trigger a recession to tame inflation but is fully committed to bringing down prices, Fed Chair Jerome Powell said on Wednesday.
“Oil markets remained under pressure as investors were concerned that U.S. rate hikes would stall an economic recovery and dampen fuel demand,” Fujitomi Securities Co. Ltd. chief analyst Kazuhiko Saito told Reuters.
“The U.S. and European hedge funds have been selling off their positions ahead of the end of the second quarter, which is also cooling investor sentiment,” Saito added, predicting the WTI could fall below $100 a barrel before the July 4 holiday in the U.S.
U.S. President Joe Biden called on Congress to temporarily suspend a federal tax on gasoline to bring down soaring fuel prices and offer some relief to American families before summer peak.
“The news temporarily boosted the oil product prices, but it was later viewed that even if the gasoline tax was suspended, retail prices would remain high, making it difficult to stimulate demand,” Fujitomi's Saito said.
Wednesday’s U.S. crude supply data from the American Petroleum Institute showed a build of 5.607 million barrels for the week ended June 17.
The U.S. Energy Information Administration’s weekly oil data will be delayed until at least next week due to systems issues.