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A general view of an oil refinery in Mongstad, Norway. File photo: REUTERS/GWLADYS FOUCHE
A general view of an oil refinery in Mongstad, Norway. File photo: REUTERS/GWLADYS FOUCHE

London — Brent oil prices slipped on Tuesday, reversing earlier gains, as concerns that a possible global recession could curtail fuel demand outweighed supply disruption fears.

Brent crude fell 38c, or 0.3%, to $113.12 a barrel by 9.14am GMT. West Texas Intermediate crude climbed 84c, or 0.8%, to $109.27 from Friday’s close. There was no settlement for WTI on Monday because of the Independence Day holiday in the US.

“Oil is still struggling to break out from its current recessionary malaise as the market pivots away from inflation to economic despair,” Stephen Innes of SPI Asset Management said in a note.

Investors are becoming more concerned about high inflation and a potential recession amid high energy prices.

In South Korea, inflation in June reach a high of almost 24 years, adding to concerns about slowing economic growth and oil demand.

Data showed business growth across the eurozone slowed further last month, with forward-looking indicators suggesting the region could slip into decline this quarter as the cost of living crisis keeps consumers wary.

However, supply concerns still loom. Earlier in the session, WTI rose more than $3 and Brent more than $1 on reports of output disruption in Norway.

Norwegian offshore workers began a strike that will reduce oil and gas output, the union leading the industrial action said.

The strike is expected to reduce oil and gas output by 89,000 barrels of oil equivalent per day (boepd), of which gas output accounts for 27,500 boepd, Norwegian producer Equinor has said.

“Oil prices are ... benefiting from the strike in Norway, so far impacting only modest volumes, and the sharp increase in Saudi official selling prices for August, suggesting that Saudi exports might not increase that much next month,” UBS analyst Giovanni Staunovo said.

Saudi Arabia, the world’s top oil exporter, raised August crude oil prices for Asian buyers to near record levels amid tight supply and robust demand.

The official selling price (OSP) for August-loading Arab Light to Asia was raised by $2.80/bbl from July to $9.30 a barrel above Oman/Dubai quotes, people familiar with the matter said. That’s close to the record premium of $9.35/bbl recorded in May.

Oil prices also found support from signs of an easing in US-China tensions after a report that US President Joe Biden was contemplating rolling back some tariffs on Chinese imports, as well as news that Chinese Vice-Premier Liu He had a “constructive” virtual dialogue with US Treasury Secretary Janet Yellen.

Reuters

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