Brent crude falls as recession fears deepen from demand fears

A view of Phillips’ 66 Los Angeles Refinery (front), which processes domestic and imported crude oil into gasoline, aviation, and diesel fuels and storage tanks for refined petroleum products at Kinder Morgan Carson Terminal (background), at sunset in Carson, California, United States, 11 March 2022. REUTERS/Beng Guan

LONDON (Reuters) – Brent crude fell on Tuesday as fears of a possible global recession curbing demand outweighed fears of supply disruptions, highlighted by an expected production cut in Norway.

Brent crude fell $1.33, or 1.2 percent, to $112.17 a barrel by 1231 GMT, while US West Texas Intermediate crude rose 30 cents, or 0.3 percent, to $108.73 a barrel from Friday’s close. No settlement was reached on WTI on Monday due to the US Independence Day holiday.

Investors are becoming more concerned as the recent rise in gas and fuel prices is heightening fears about a recession.

“Oil is still struggling to come out of the current recession as the market shifts from inflation to economic desperation,” Stephen Innes of SBI Asset Management wrote.

In the euro zone, data showed that business growth across the bloc slowed further last month, with forward-looking indications that the region could slide lower this quarter as the cost of living crisis keeps consumers wary. Read more

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

However, supply concerns remain, and earlier in the session WTI rose more than $3 and Brent crude more than $1 due to a possible disruption to production in Norway, as overseas workers started a strike that will affect production. Read more

The strike is expected to cut oil and gas production by 89,000 barrels of oil equivalent per day (boepd), with gas production making up 27,500 barrels of oil per day, Norwegian producer Equinor (EQNR.OL) He said.

Giovanni Stonovo, analyst at UBS “Oil prices … said.

Saudi Arabia, the world’s largest oil exporter, raised crude oil prices in August for Asian buyers to near record levels amid tight supplies and strong demand. Read more

Meanwhile, former Russian President Dmitry Medvedev said on Tuesday that the Japanese proposal to limit the price of Russian oil at about half its current level would lead to a significant drop in oil in the market and could push prices above $300-400 per barrel. Read more

G7 leaders agreed last week to explore the feasibility of setting temporary import price limits for Russian fossil fuels, including oil, in an effort to limit resources to fund Moscow’s “special military operation” in Ukraine. Read more

(Reporting by Bozorgmehr Sharafeddin from London, Additional reporting by Florence Tan and Moyo Shaw); Editing by Christian Schmolinger, Jason Neely and Alexander Smith

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