Oil prices weaken on demand concerns



NEW YORK:

Oil prices fell about $1 a barrel on Thursday in volatile trading as investors weighed the risk that rising interest rates could trigger a recession and cut demand for fuel.

Brent crude futures fell 90 cents, or 0.8%, to $110.84 by 1520 GMT. US West Texas Intermediate (WTI) crude futures were down $1.07, or 1%, at $105.12.

Investors were still trying to assess whether inflation-fighting central banks could push the world economy into recession as they raise interest rates.

“Recession fears have their grip on markets, but the mood swing is rather one of ebbing optimism than swelling pessimism,” said Julius Baer analyst Norbert Rucker.

US Federal Reserve chief Jerome Powell said the central bank was focused on fighting inflation and that the labour market was unsustainably strong, comments that stoked fears of more rate hikes.

Investors were also concerned that high gasoline prices had hit a ceiling and demand destruction would soon set in, said Robert Yawger, Director of Energy Futures at Mizuho in New York.

“That’s definitely worked its way into the conversation,” said Yawger, who added that he thought gasoline still had room to rise.

US retail prices are currently averaging $4.94 a gallon, down about 10 cents from the peak, according to the American Automobile Association (AAA).

Read Oil slumps 5% on recession concerns

The most recent estimates by the American Petroleum Institute, according to market sources, showed US crude and gasoline inventories rising last week, which also weighed on prices, Yawger said.

Official weekly estimates for US oil inventories were scheduled to be released on Thursday but technical problems will delay those figures until next week, the US Energy Information Administration said.

US Energy Secretary Jennifer Granholm and other government officials were scheduled to hold an emergency meeting about paths to lowering surging fuel prices in the
United States.

Russia continues to find alternative customers for its oil, with China and India among the biggest buyers now as Western countries have sanctioned Moscow over the invasion of Ukraine.

China’s crude oil imports from Russia in May were up 55% from a year earlier and at record highs.

Published in The Express Tribune, June 24th, 2022.

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Originally published at tribune.com.pk

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