oil falls as fears of recession intensify | Rigzone

Oil fell as Federal Reserve Chairman Jerome Powell’s testimony before a House committee heightened concerns of a looming recession.

West Texas Intermediate fell to nearly $104 a barrel as prices fell more than 10% in the past week. Powell said his commitment to fighting inflation was “unconditional”. Warnings of a potential recession and economic slowdown overshadowed oil market fundamentals that point to a growing supply shortage. Recent crude swings have been too volatile for many traders. Open interest on major futures fell to the lowest since 2015 in recent days.

“Future demand destruction due to a possible impending recession counteracts real near-term demand that remains very strong,” said Dennis Kissler, senior vice president of trading at BOK Financial. “As long as fear of a recession persists, strong near-term demand is keeping crude choppy.”

Updated statistics on the state of US stocks will not be released this week. The Energy Information Administration’s inventory report is delayed after a power outage damaged some of the agency’s equipment.

As a result, markets will have to rely on a US industry report to analyze weekly inventory data. The American Petroleum Institute reported that crude holdings increased by 5.6 million barrels last week, while gasoline holdings also increased, according to people familiar with the data.

Over the past two weeks, oil has quickly given up gains in a volatile quarter as investors try to assess the trajectory of the global economy and its impact on commodities. There is about a 50% chance that the global economy will succumb to a recession, according to Citigroup Inc. and Deutsche Bank AG.

Prices:

  • WTI August delivery fell $1.92 to settle at $104.27 in New York.
  • Brent for August settlement fell $1.69 to settle at $110.05 a barrel.

There is still little consensus among major banks on the outlook for oil. Goldman Sachs Group Inc. said in a note on Tuesday that demand is still ahead of supply, while warning that the Fed “cannot print commodities.” Citi sees crude falling this year and beyond.

So far, there has been only limited relief in refined product markets – where stronger surges have occurred. Diesel futures in Europe closed Wednesday more than $57 a barrel higher than crude, a record in data since 2011.

(with help from Alex Longley)

About Mildred B.

Check Also

Wall St to open higher on Microsoft, Alphabet earnings ahead of Fed

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, …