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Oil prices hit lowest since Ukraine invasion amid recession fears

Commodities Aug 04, 2022 03:22PM ET
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© Reuters. FILE PHOTO - A PetroChina worker inspects a pump jack at an oil field in Tacheng, Xinjiang Uighur Autonomous Region, China June 27, 2018. REUTERS/Stringer AT

By Noah Browning

LONDON/NEW YORK (Reuters) - Global oil prices dropped on Thursday to their lowest levels since before Russia's February invasion of Ukraine, as traders fretted over the possibility of an economic recession later this year that could torpedo energy demand.

Benchmark Brent crude futures settled down $2.66, or 2.75%, at $94.12, the lowest close since Feb. 18. West Texas Intermediate (WTI) crude futures settled down $2.34, or 2.12%, at $88.54, the lowest close since Feb. 2.

The fall in oil prices could come as a relief to large consumer nations including the United States and countries in Europe, which have been urging producers to ramp up output to offset tight supplies and combat raging inflation.

Oil had surged to well over $120 a barrel earlier in the year. A sudden rebound in demand from the darkest days of the COVID-19 pandemic coincided with supply disruptions stemming from sanctions on major producer Russia over its invasion of Ukraine.

Thursday's selling followed an unexpected surge in U.S. crude inventories last week. Gasoline stocks, the proxy for demand, also showed a surprise increase as demand slowed under the weight of gasoline prices near $5 a gallon, the Energy Information Administration said.

"Seems the weakness from Wednesday following weaker than expected U.S. implied gasoline demand, together with the break of technical support levels on Thursday, has dragged oil lower," said Giovanni Staunovo, an analyst at UBS.

The demand outlook remains clouded by increasing worries about an economic slump in the United States and Europe, debt distress in emerging market economies, and a strict zero COVID-19 policy in China, the world's largest oil importer.

"A break below $90 is now a very real possibility, which is quite remarkable given how tight the market remains and how little scope there is to relieve that," said Craig Erlam, senior market analyst at Oanda in London.

"But recession talk is getting louder and should it become reality, it will likely address some of the imbalance."

The Bank of England (BoE) raised interest rates on Thursday and warned about recession risks.

An OPEC+ agreement on Wednesday to raise its output target by 100,000 barrels per day (bpd) in September, equivalent to 0.1% of global demand, was viewed by some analysts as bearish for the market.

OPEC heavyweights Saudi Arabia and the UAE are also ready to deliver a "significant increase" in oil output should the world face a severe supply crisis this winter, sources familiar with the thinking of the top Gulf exporters said.

Oil prices hit lowest since Ukraine invasion amid recession fears
 

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Comments (13)
noobmodern88 noobmodern88
noobmodern88 noobmodern88 Aug 04, 2022 4:33PM ET
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because nat gas doesn't  effect demonrat election so they did not manipulated it
noobmodern88 noobmodern88
noobmodern88 noobmodern88 Aug 04, 2022 4:28PM ET
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It will be funny after  the mid term election end oil spike back again to 130 dollar
Kelly Mayer
Kelly Mayer Aug 04, 2022 2:11PM ET
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This is the most manipulated market ever. There is no recession or energy or food crisis. That is what the market is saying. No China US tensions, no deglobalization. WOW... just WOW...
WESLEY WARREN
WSQUARED Aug 04, 2022 1:52PM ET
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gas didnt
noobmodern88 noobmodern88
noobmodern88 noobmodern88 Aug 04, 2022 1:52PM ET
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because nat gas doesn't  effect demonrat election so they did not manipulated it
David Giles
David Giles Aug 04, 2022 1:29PM ET
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Are the writers of this article making fake news or what. Saudi has said it has no more capacity. It can't give much more until 2027. This is a warning. To say they are waiting for a huge release if needed is an out right lie.
Eagle Gon
Eagle_PT Aug 04, 2022 1:29PM ET
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the world is in recession no need for huge increases demand is falling
WESLEY WARREN
WSQUARED Aug 04, 2022 1:29PM ET
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uh still gotta have heat
Brad Albright
Brad Albright Aug 04, 2022 1:29PM ET
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What are the Saudis currently pumping and what is their capacity?
Rahid Shaikh
Rahid Shaikh Aug 04, 2022 12:49PM ET
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didn't understand the there how they took the thing as they wish or its realitywhen crude going upside then its inflationand when its going downside then recession. 🤦😡
Lei Yi
Lei Yi Aug 04, 2022 11:51AM ET
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OPEC members are genius, when we enter recession they suddenly add oil, this what I call USA pet.
Dung Ng Kim
Dung Ng Kim Aug 04, 2022 11:51AM ET
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How much that they add on?
Brad Albright
Brad Albright Aug 04, 2022 11:51AM ET
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A drop.
Eagle Gon
Eagle_PT Aug 04, 2022 11:51AM ET
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what is funny is OPEC helped created this recession with high energy prices. Now demand is falling EV sales booming ICE sales falling. LOL
Jen Ever
Jen Ever Aug 04, 2022 10:28AM ET
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I'm happy for been able to get my funds with Brucekkovnerso at g male
Jamie An
Jamie An Aug 04, 2022 4:27AM ET
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Oil price down even producing quantity will not be increased that expexted. It means price will jump suddenly soon.
Yasmin Zania
Yasmin Zania Aug 04, 2022 3:18AM ET
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Can oil will cross 100 again
Shah Shawon
NinjaShah Aug 04, 2022 3:18AM ET
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it will.. not only that it will go at least 120 , but not in this month.. maybe we can see oil might touch 99 or even 100 once this month, but it will be under 100 for this and nxt month.. from end of september or in october we will see over 100+ oil
noobmodern88 noobmodern88
noobmodern88 noobmodern88 Aug 04, 2022 3:18AM ET
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oil after midterm election will be back to 120
 
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