Australia markets open in 9 hours 1 minute

    +9.20 (+0.13%)

    +0.0090 (+1.30%)
  • ASX 200

    +5.00 (+0.07%)
  • OIL

    -0.41 (-0.46%)
  • GOLD

    +13.10 (+0.73%)

    +1,259.88 (+3.79%)
  • CMC Crypto 200

    +20.72 (+3.82%)

Oil Down as Recession Fears Outweigh Supply Tightness

  • Oops!
    Something went wrong.
    Please try again later.
·2-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

By Zhang Mengying – Oil was down on Monday morning in Asia as fears of an economic slowdown outweighed the supply tightness amid lower output from the Organization of the Petroleum Exporting Countries (OPEC).

Brent oil futures inched up 0.05% to $111.66 by 01:23 AM ET (0523 GMT) and crude oil WTI futures inched up 0.01% to $108.42.

“The recession fears are the primary bearish factor that has capped the surge in oil prices. Rising rates and a plunge in consumer confidence have dented the fuel demand outlook, while data shows that the U.S. petroleum refinery capacity has improved,” CMC Markets analyst Tina Teng told Reuters.

“In addition, a strong USD also weakens broad commodity markets, including crude prices.”

In the U.S. and elsewhere, signs of economic weakness are becoming more apparent with U.S. consumer sentiment dropping to a record low in June. The U.S. Federal Reserve reiterated last week its resolution to bring down inflation, increasing concerns of a recession following interest rate hikes.

Oil supply remains tight. Output from the 10 members of OPEC in June fell by 100,000 barrels per day (bpd) to 28.52 million bpd, off their pledged increase of about 275,000 bpd, according to Reuters.

“Energy markets remain laden with specific supply risks that make being short a nervy experience,” Commonwealth Bank commodities analyst Tobin Gorey told Reuters.

Drops in production from Nigeria and Libya offset increases by Saudi Arabia and other producers, and Libya faces further supply disruption due to political unrest, making OPEC less likely to meet its newly increase production quota, ANZ Research analysts said in a note.

Libya’s exports have dropped to between 365,000 bpd and 409,000 bpd, down about 865,000 bpd compared to normal levels, the National Oil Corp said last week.

Related Articles

Oil Down as Recession Fears Outweigh Supply Tightness

Gold Up Over Weakening Dollar Amid Growth Fears

Gold teeters above $1,800 as lower yields counter dollar strength

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting