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Oil falls to 6-mth low on economic data, awaits news of Iran nuclear deal

Commodities Aug 16, 2022 03:32PM ET
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© Reuters. FILE PHOTO: A view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel
 
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By Stephanie Kelly

NEW YORK (Reuters) -Oil prices fell about 3% on Tuesday to their lowest since before Russia's invasion of Ukraine as economic data spurred concerns about a potential global recession, while the market awaited clarity on talks to revive a deal that could allow more Iranian oil exports.

Brent crude futures fell $2.76, or 2.9%, to settle at $92.34 a barrel. The contract hit a session low of $91.71 per barrel, the lowest since Feb. 18.

West Texas Intermediate crude (WTI) shed $2.88, or 3.2%, to settle at $86.53 a barrel. The benchmark fell to a session low of $85.73 per barrel, lowest since Jan. 26.

The contracts fell about 3% in their previous sessions.

The European Union is assessing Iran's response to what the bloc has called its "final" proposal to save a 2015 nuclear deal, and consulting with the United States, an EU spokesperson said on Tuesday.

Iran responded to the proposal late on Monday but none of the parties provided any details.

"It is still unclear what Iran has told the European Union last night, so some tricky items might impact the outcome of the nuclear deal," UBS analyst Giovanni Staunovo said.

Weak economic indicators weighed on prices.

U.S. homebuilding fell to the lowest level in nearly 1-1/2 years in July, weighed down by higher mortgage rates and prices for construction materials, suggesting the housing market could contract further in the third quarter.

"Oil traders reacted because of concerns about an economic slowdown and housing uses energy," said Phil Flynn, an analyst at Price Futures group. "That caught us by surprise."

China's central bank cut lending rates to try to revive demand as the nation's economy slowed unexpectedly in July after Beijing's zero-COVID policy and a property crisis slowed factory and retail activity.

State media quoted Premier Li Keqiang as saying that China will reasonably step up macro policy support for the economy.

Barclays (LON:BARC) cut its Brent price forecasts by $8 per barrel for this year and next, as it expects a large surplus of crude oil over the near-term due to "resilient" Russian supplies.

Market participants awaited industry data on U.S. oil inventories expected later on Tuesday. Crude and gasoline stockpiles likely fell last week, while distillate inventories rose, a preliminary Reuters poll showed on Monday. [EIA/S]

Oil falls to 6-mth low on economic data, awaits news of Iran nuclear deal
 

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Comments (3)
Derek Lee
Derek Lee Aug 16, 2022 8:56AM ET
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Oil have to go down to revive the economy
Kelly Mayer
Kelly Mayer Aug 16, 2022 5:02AM ET
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Also, stock market goes up due to inflation relief (hold my beer, btw). Oil goes down due to recession fears. No. Doesnt work like that.
Andrew Ulferts
Andrew Ulferts Aug 16, 2022 5:02AM ET
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I love it. It’s so nice to see I’m not the only one that isn’t easily brainwashed by the “news.”
David Vukelic
David Vukelic Aug 16, 2022 5:02AM ET
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Yeah so stupid lol
Kelly Mayer
Kelly Mayer Aug 16, 2022 5:00AM ET
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Highest household debt in record. Supply increase by depleting US inventories. Demand is not a problem. False headlines in favor of the Biden administration oil price manipulation, is.
Brad Albright
Brad Albright Aug 16, 2022 5:00AM ET
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Keep betting against the Biden adminstration and you'll learn the difference between dogma and reasoning.
 
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