Oil Prices Drop on Weak Demand Outlook
Following the Covid-19 pandemic lockdowns in the world’s largest oil-consuming economy, China, an expectation of a weak demand outlook has continued to drag global prices of crude lower. Oil prices are further impacted surprise increase in United States inventories while India’s economy remains in recovery mode.
On Thursday, oil prices continued to fall amid potential diminished demand from recession fears in the US. In the market, international benchmark Brent crude traded at $93.98 per barrel, up 0.13% from the closing price of $94.10 a barrel in the previous trading session.
American benchmark West Texas Intermediate (WTI) traded at $88.42 per barrel at the same time for a 0.07% loss after the previous session closed at $88.48 a barrel. READ: Oil Dips Below $90 on Developed Markets Recession Fears
Fears of rising interest rates, which could lead to an economic recession, knocked prices down. Higher-than-expected inflation in the US triggered concerns that the Federal Reserve could make large-scale rate hikes.
The slower oil demand pace in China, the world’s largest importer of crude oil, is also putting pressure on prices, with strict Covid lockdowns in various parts of the country. In line with its zero-Covid policy, Beijing introduced new lockdown measures last week.
Meanwhile, US commercial crude oil inventories increased 0.6% during the week ending Sept. 9, according to data released by the Energy Information Administration on Wednesday.
Inventories rose by around 2.4 million barrels to 429.6 million barrels, against the market expectation of a fall of around 200,000 barrels, signalling lower demand.
Oil investors started the week with unfolding demand fears caused by China’s strict pandemic measures, as the country last week extended lockdown measures in the western city of Chengdu, a city home to almost 21 million people. # Oil Prices Drop on Weak Demand Outlook
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