Oil prices continue to swing after two days of heavy losses, amid concerns of a looming global recession and supply constraints.
Earlier this week, oil prices reversed losses and edged up as concerns of tight supply amid lower OPEC output and sanctions outweigh the growing fears of a global recession. But throughout the week, those prices have swung.
Brent, the global benchmark for two-thirds of the world’s oil, fell to as much as $98.54 a barrel but pared losses to trade at $100.81 on Thursday morning. It fell by 9.5 percent Tuesday, its biggest daily drop to occur since March.
The gauge that tracks US crude, West Texas Intermediate, was trading 0.21 percent higher at $98.74 a barrel after dropping eight percent. It had closed below $100 on Tuesday for the first time since late April this year, marking new lows again.
Global concerns of an impending recession keep growing. This is especially the case amid mounting inflationary pressures, subsequent monetary policy tightening by central banks, and the lingering impact of the Covid pandemic.
The Russian war in Ukraine has had a massive global effect. Inflation around the world has risen sharply amid steep rises in food prices and commodities prices since Russia invaded Ukraine.
The output of oil continues to vary between nations in the aftermath and ongoing effects of the Russian war. Output from the 10 members of the Organization of the Petroleum Exporting Countries (OPEC) in June fell 100,000 barrels per day (BPD) to 28.52 million BPD, off their pledged increase of about 275,000 BPD.
Increases by Saudi Arabia and similar large producers were offset by declines in Nigeria and Libya. Libya faces further supply disruption due to escalating political unrest. This means OPEC may have difficulty meeting its newly increased production quotas.
Traders will be watching out for official prices for August from top oil exporter Saudi Arabia. This is expected to show how tight the oil market is.
Be the first to comment