Brent crude dropped $1.04, or 1.4%, to $75.77 a barrel by 6.05am GMT
05 August 2024 - 09:03
by Florence Tan
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Singapore — Oil futures extended losses in a volatile session on Monday as fears of a recession in top oil consumer the US offset supply worries stemming from mounting tension in the Middle East, the world’s largest oil producing region.
Share markets also tumbled across Asia as US recession worries sent investors rushing from risk assets while wagering that rapid fire rate cuts would be needed to rescue growth.
Brent crude dropped $1.04, or 1.4%, to $75.77 a barrel by 6.05am GMT, while US West Texas Intermediate crude was at $72.43 a barrel, down $1.09, or 1.5%.
Brent and WTI had tumbled more than 3% on Friday, with both contracts marking their fourth straight week of losses — their biggest losing streaks since November.
US recession fears, stemming from Friday’s weak July payrolls report, only “adds to Chinese demand concerns that have been lingering in the oil market for some time”, ING analysts led by Warren Patterson said in a note.
Slumping diesel consumption in China, the world’s biggest contributor to oil demand growth, is weighing on oil prices.
Oil also came under pressure after Opec+ stuck to its plan to phase out voluntary production cuts from October, which means supplies will rise later this year, analyst say.
A Reuters survey showed on Friday that Opec oil output rose in July despite production cuts by the group.
However, oil prices were supported by geopolitical risks in the Middle East as fighting in Gaza continued on Sunday, the day after a round of talks in Cairo ended without result.
Israel and the US are bracing for a serious escalation in the region after Iran and allies Hamas and Hezbollah pledged to retaliate against Israel for the killings of Hamas’ leader, Ismail Haniyeh, and Fuad Shukr, a top military commander from Lebanese militant group Hezbollah last week.
“The risk of a wider regional war, while I still think is small, can’t be ignored,” Sydney-based IG market analyst Tony Sycamore said. “There are some significant left and right tail risks at this point.”
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil prices fall on US recession fears
Brent crude dropped $1.04, or 1.4%, to $75.77 a barrel by 6.05am GMT
Singapore — Oil futures extended losses in a volatile session on Monday as fears of a recession in top oil consumer the US offset supply worries stemming from mounting tension in the Middle East, the world’s largest oil producing region.
Share markets also tumbled across Asia as US recession worries sent investors rushing from risk assets while wagering that rapid fire rate cuts would be needed to rescue growth.
Brent crude dropped $1.04, or 1.4%, to $75.77 a barrel by 6.05am GMT, while US West Texas Intermediate crude was at $72.43 a barrel, down $1.09, or 1.5%.
Brent and WTI had tumbled more than 3% on Friday, with both contracts marking their fourth straight week of losses — their biggest losing streaks since November.
US recession fears, stemming from Friday’s weak July payrolls report, only “adds to Chinese demand concerns that have been lingering in the oil market for some time”, ING analysts led by Warren Patterson said in a note.
Slumping diesel consumption in China, the world’s biggest contributor to oil demand growth, is weighing on oil prices.
Oil also came under pressure after Opec+ stuck to its plan to phase out voluntary production cuts from October, which means supplies will rise later this year, analyst say.
A Reuters survey showed on Friday that Opec oil output rose in July despite production cuts by the group.
However, oil prices were supported by geopolitical risks in the Middle East as fighting in Gaza continued on Sunday, the day after a round of talks in Cairo ended without result.
Israel and the US are bracing for a serious escalation in the region after Iran and allies Hamas and Hezbollah pledged to retaliate against Israel for the killings of Hamas’ leader, Ismail Haniyeh, and Fuad Shukr, a top military commander from Lebanese militant group Hezbollah last week.
“The risk of a wider regional war, while I still think is small, can’t be ignored,” Sydney-based IG market analyst Tony Sycamore said. “There are some significant left and right tail risks at this point.”
Reuters
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