Oil falls $ 10 / barrel as fears of recession darken prospects for demand

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

NEW YORK, July 5 (Reuters) – Oil fell by around 10 dollars a barrel on Tuesday due to concerns about a looming global recession that limits demand, even with expected supply disruptions when oil and gas workers in Norway began to strike.

Global benchmark Brent oil was down $ 10.77, or 9.5%, to $ 102.73 per barrel at 11:43 am EDT (1543 GMT). US West Texas Intermediate (WTI) oil fell $ 9.30, or 8.6%, to $ 99.13 a barrel from Friday’s close. There was no WTI settlement on Monday due to a US holiday.

“The market is starting to tighten, but we’re still struggling, and the only way you can explain it is the fear of recession in all risk assets,” said Robert Yawger, director of energy futures at Mizuho, ​​New York. “You feel the pressure.”

Oil futures fell along with equities, which often act as a demand indicator for crude oil, as investors worried about the possibility of an economic downturn as central banks around the world took aggressive measures to curb inflation.

In the eurozone, data showed that business growth across the block slowed further last month, with forward-looking indicators suggesting that the region may fall in this quarter as the cost-of-living crisis keeps consumers on track. read more

In South Korea, inflation reached almost 24 years in June, which contributed to concerns about declining economic growth and oil demand. read more

Supply concerns persist, first raised by WTI and Brent earlier in the session, due to potential production disruptions in Norway, where offshore workers went on strike. read more

The strike is expected to reduce oil and gas production by 89,000 barrels of oil equivalents per day (boepd), of which gas production amounts to 27,500 boepd, the Norwegian producer Equinor (EQNR.OL) has said.

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

Meanwhile, former Russian President Dmitry Medvedev said a reported proposal by Japan to limit the price of Russian oil to about half of its current level would mean less oil on the market and could push prices above $ 300- $ 400 per barrel. read more

G7 leaders last week agreed to look into the possibility of imposing temporary import price caps on Russian fossil fuels, including oil, in an effort to limit resources to fund Moscow’s “special military operation” in Ukraine. read more

Additional reporting by Bozorgmehr Sharafedin in London, Florence Tan and Muyu Xu; Edited by Marguerita Choy and Edmund Blair

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