Brent Crude Hits Pre-Ukraine Invasion Lows on Recession Fears

FILE PHOTO – A PetroChina worker inspects a pump jack at an oil field in Tacheng, Xinjiang Uyghur Autonomous Region, China June 27, 2018. REUTERS/Stringer AT

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  • BoE raises rates and warns of recession risk
  • Saudi Arabia and UAE save oil firepower in case of winter supply crisis
  • OPEC+ agrees to increase oil production target by 100,000 bpd
  • Tight global supply offers price support: analysts

LONDON, Aug 4 (Reuters) – Oil prices fell on Thursday, with Brent hitting $93.50 a barrel, the lowest level since February 21 before the Russian invasion of Ukraine sent prices skyrocketing, due to to fears of an economic downturn that could dampen demand for fuel.

Brent crude futures were down $2.88, or 3%, at $93.90 a barrel by 1543 GMT, while West Texas Intermediate (WTI) crude futures were down $2.37, down 2.6%. , at $88.29.

Brent hit a low of $93.50, the lowest since February 21, while US crude touched its lowest level since February 3 at $87.97.

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The sale followed an unexpected rise in US crude inventories last week. Gasoline stocks, the gauge of demand, also showed a surprise rise as demand slowed, the Energy Information Administration said. read more

The demand outlook remained clouded by growing concerns about an economic downturn in the United States and Europe, debt problems in emerging market economies and a strict zero COVID-19 policy in China, the world’s largest oil importer. world.

“A break below $90 is now a very real possibility, which is quite remarkable given how tight the market remains and how little room there is to ease that,” said Craig Erlam, senior market analyst at Oanda in London.

“But the recession talk is getting louder and, if it comes true, it’s likely to address some of the imbalance.”

The added pressure followed fears that rising interest rates could slow economic activity and limit fuel demand. The Bank of England (BoE) raised rates on Thursday and warned of recession risks.

An agreement by OPEC+ on Wednesday to increase its production target by just 100,000 barrels per day (bpd) in September, equivalent to 0.1% of global demand, was seen by some analysts as bearish for the market. read more

OPEC heavyweights Saudi Arabia and the United Arab Emirates are poised to deliver a “significant increase” in oil production should the world face a severe supply crisis this winter, sources familiar with the matter said. the thinking of the main exporters of the Gulf. read more

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Additional reporting by Laura Sanicola and Emily Chow; Edited by Bernadette Baum

Our standards: the Thomson Reuters Trust Principles.

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