Agencies
London
Oil prices slumped on Thursday evening after rallying earlier in the day, nearly touching $90 a barrel, as investors continue to weigh the impact of a potential recession on global demand ahead of the OPEC+ meeting next week.
Brent, the benchmark for two thirds of the world’s oil, was down 0.57 per cent at $88.81 a barrel at 10.08pm Qatar time. West Texas Intermediate, the gauge that tracks US crude, was trading 0.62 per cent lower at $81.64 a barrel.
Crude prices have been extremely volatile in recent days and rose mid-week on a tight market amid fears of a supply constraint fuelled by the ongoing Russia-Ukraine conflict and declining stockpiles in the US.
“Oil prices rallied along with a broader risk-on move with Brent futures settling up 3.5 per cent to $89.32 per barrel and WTI gaining by 4.65 per cent to $82.15 per barrel [on Wednesday],” said Edward Bell, senior director of Market Economics at Emirate NBD.
“Apparent sabotage on the Nord Stream pipeline has also thrust energy markets back into the geopolitical focus.”
Meanwhile, commercial crude inventories in the US fell by 4.8 million barrels last week, according to data from the US Energy Information Administration. Oil production also fell by 100,000 barrels per day and is “likely to dip again over a coming few data prints” due to the impact of Hurricane Ian, he said.
“Crude prices extended gains after the EIA report showed crude and gasoline stockpiles both declined,” added Edward Moya, senior market analyst at Oanda.
“Crude exports rose for a third consecutive week and US production dipped as maintenance occurred with some offshore pipelines in the Gulf of Mexico.” However, global recession fears continue to weigh on the market as the world’s central banks tighten monetary policy to curb soaring inflation.
At least seven of 10 chief economists at the World Economic Forum consider a global recession to be “at least somewhat likely”, the WEF said on Wednesday in its latest quarterly Chief Economists Outlook.
They also expect “reduced growth, stubbornly high inflation and real wages to continue falling for the remainder of 2022 and 2023”, the forum said.
“Prospects for the global economy have deteriorated further since the May 2022 edition of this report, with expectations for growth pared back across all regions,” it said.
“The grim outlook for growth is being driven in part by high inflation, which has triggered sharp monetary tightening across many economies. With the exception of China and the Mena region, most of the chief economists surveyed expect high inflation to persist for the remainder of 2022, with expectations somewhat moderating in 2023.”
In July, the International Monetary Fund lowered its growth forecast for the global economy to 3.2 per cent this year, from its previous projection of 3.6 per cent in April.
