On Wednesday, crude oil prices dropped more than $3 to their lowest level since Russia invaded Ukraine as a result of demand concerns fanned by potential recession threats and dismal Chinese trade data. By 1338 GMT, Brent oil futures had dropped $3.40, or 3.66%, to $89.43 per barrel, striking their lowest level since February 3 and breaching the $90 mark for the first time since February 8.
As recession worries reemerged, US West Texas Intermediate crude dropped $3.42, or 3.94%, to $83.46, hitting its lowest level since January 24. According to Stephen Brennock, the threat of a demand-draining recession in the West is getting closer to reality as surging prices and increasing interest rates hurt consumer spending.
The shutdown of the Nord Stream 1 pipeline, according to credit rating agency Fitch, has made a recession in the euro zone more likely. When the European Central Bank meets on Thursday, a significant increase in interest rates is largely anticipated. On September 21, there will be a meeting of US Federal Reserve. Concerns about demand have been exacerbated by China’s weak economic indicators and strict zero-COVID policy.
According to Wednesday’s customs figures, the nation’s imports of crude oil plummeted 9.4% from a year earlier in August. Liz Truss, the incoming prime minister of Britain, stated on Wednesday that she wanted to see more crude oil and gas extracted from the North Sea. Prior to this, prices had been sustained by Russian President Vladimir Putin’s threat to stop all crude oil and gas shipments if price caps were put on Russia’s natural resources.
Price Capping Concerns
Only a few hours later, the European Union proposed capping Russian gas, increasing the possibility of rationing this winter in some of the richest nations in the world. Analysts already anticipate a restricted supply of crude oil in the year’s final three months.
The American Petroleum Institute’s weekly US inventory figures will be made available later on Wednesday, one day later than usual, due to a holiday on Monday. According to a preliminary Reuters poll released on Tuesday, US oil stockpiles are predicted to have decreased for a fourth straight week, falling by an estimated 733,000 barrels in the week ending September 2.
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