Oil hits 6-month low amid recession fears

Oil reached a six-month low on Wednesday following a brief rebound, as concerns about the possibility of a worldwide recession, which would dampen demand, eclipsed data showing a decline in US oil and gasoline inventories.

Consumer price inflation in the United Kingdom soared to 10.1% in July, its highest level since February 1982, tightening the squeeze on consumers. Wednesday’s data did little to help the economic outlook, revealing that consumer price inflation reached its highest level since February 1982.

Brent crude fell as low as $91.51, the lowest level since February, and was down 5 cents to $92.29 as of 09:31 GMT. US West Texas Intermediate (WTI) crude dropped 20 cents, or 0.2 percent, to $86.33 per barrel.

“The oil market is failing to overcome fears of a recession, and there is little reason to believe this will change shortly,” said Stephen Brennock, an oil broker at PVM.

Earlier, prices were bolstered by data indicating decreased US oil and petroleum inventories. Tuesday saw a decrease of approximately 448,000 barrels of crude oil and 4.5 million barrels of gasoline, according to reports citing data from the American Petroleum Institute.

At 14:30 GMT, the Energy Information Administration will release official inventory data.

After Russia’s invasion of Ukraine heightened supply fears, oil prices skyrocketed in 2022, approaching a record high of $147 in March. As a result of the likelihood of a recession displacing these concerns, prices have declined.

“There are significant negative risks due to the GDP outlook and the lingering uncertainty surrounding Chinese Covid regulations,” said Oanda broker Craig Erlam.

The migration of players, particularly hedge funds and speculators, has resulted in higher daily price fluctuations than in past years.

On the oil supply front, the market awaits developments from discussions to resurrect Iran’s 2015 nuclear deal with world powers, which, if successful, might lead to an increase in Iranian oil shipments.

On Tuesday, the European Union and the United States stated that they were analyzing Iran’s answer to the EU’s “final” proposal to rescue the deal.