A view of the Phillips 66 Company’s Los Angeles refinery (foreground), which processes domestic and imported crude oil into gasoline, aviation and diesel fuels, and storage tanks for refined petroleum products at the Kinder Morgan Carson Terminal (background), at sunset in Carson, California U.S. March 11, 2022. R/Bing Guan
LONDON, July 5 (R) – Brent oil slid on Tuesday as concerns over a possible global recession choking demand outweighed fears of a supply disruption, highlighted by an expected production cut in Norway.
Brent crude was down $1.33, or 1.2%, to $112.17 a barrel by 1231 GMT, while US West Texas Intermediate (WTI) crude was down 30 cents, or 0.3%, to $108.73 a barrel since the close on Friday. Due to the US holiday “Independence Day”, there was no accounting for WTI on Monday.
Investors’ concerns are mounting as the recent rise in gas and fuel prices amplifies fears of a recession.
“Oil is still struggling to break out of its current recessionary malaise as the market pivots away from inflation into economic desperation,” wrote Stephen Innes of SPI Asset Management.
In the euro zone, data showed that business growth across the bloc has slowed further over the past month, with forward-looking indicators suggesting the region could slide into a decline this quarter as the cost of living crisis makes consumers wary. Continue reading
And in South Korea, inflation nearly hit a 24-year high in June, fueling concerns about slowing economic growth and oil demand. Continue reading
Still, supply concerns remain and at the start of the session, WTI is up more than $3 and Brent is up more than $1 on possible production disruptions in Norway, where offshore workers started a strike that will affect production. Continue reading
The strike is expected to reduce oil and gas production by 89,000 barrels of oil equivalent per day (boepd), of which gas production accounts for 27,500 boepd, Norwegian producer Equinor (EQNR.OL) said.
“Oil prices … are benefiting from the strike in Norway, which has only affected modest volumes so far, and the sharp rise in official Saudi sales prices for August, suggesting that Saudi exports may not rise as much next month,” UBS analyst Giovanni Staunovo said.
Saudi Arabia, the world’s largest oil exporter, raised crude oil prices to near record levels for Asian buyers in August amid tight supply and resilient demand. Continue reading
Meanwhile, Russia’s former President Dmitry Medvedev said on Tuesday a reported Japanese proposal to cap the price of Russian oil to about half its current level would result in significantly less oil on the market and prices above $300-$400 a barrel to drive. Continue reading
G7 leaders agreed last week to study the feasibility of a temporary import price cap on Russian fossil fuels, including oil, to limit resources to fund Moscow’s “special military operation” in Ukraine. Continue reading
Reporting from Bozorgmehr Sharafedin in London, additional reporting from Florence Tan and Muyu Xu; Edited by Christian Schmollinger, Jason Neely and Alexander Smith
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