Brent crude hits pre-Ukraine invasion lows on recession fears

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

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  • BoE raises rates and warns of recession risks
  • Saudi Arabia and the United Arab Emirates save their oil firepower in the event of a winter supply crisis
  • OPEC+ agrees to raise 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 crude hitting $93.50 a barrel – the lowest since February 21 before Russia’s invasion of Ukraine sent prices soaring – as as fears were mounting of an economic recession that could undermine fuel demand.

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

Brent crude hit a low of $93.50, the lowest since Feb. 21, while U.S. crude touched its lowest since Feb. 3 at $87.97.

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The selloff follows an unexpected increase in U.S. crude oil inventories last week. Gasoline inventories, the proxy for demand, also showed a surprise increase as demand slowed, the Energy Information Administration said. Read more

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

“A break below $90 is now a very real possibility, which is quite remarkable given the tightness of the market and the limited scope for relief,” said Craig Erlam, senior market analyst at Oanda. in London.

“But the talk of the recession is getting louder and if it becomes reality, that would probably resolve some of the imbalance.”

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

An OPEC+ deal on Wednesday to raise 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 ready to provide a “significant increase” in oil production if the world faces a severe supply crisis this winter, say sources close to the thinking of major Gulf exporters. Read more

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

Our standards: The Thomson Reuters Trust Principles.

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