Oil Tumbles Below $110 As Fears Of Recession Intensify

Oil prices fell 6 percent early Wednesday, with Brent plunging below $110 a barrel as the market fears a looming recession will dampen global demand for oil.

Wednesday at 9:10 a.m. EST, WTI Crude fell below $105 a barrel and traded at $102.77, down 6.24 percent on the day. The international benchmark, Brent Crude, had fallen below the $110 threshold and stood at $108.18, down 5.70 percent.

A growing number of analysts and economists are now saying that the Fed’s attempts to curb inflation with aggressive rate hikes may not meet policymakers’ goal of ‘soft landing’ the US economy and may even plunge into recession within a year. lead or a year and a half.

In addition, the strong US dollar is also weighing on oil prices, as a strong greenback makes oil purchases more expensive for holders of other currencies. A rising US dollar could affect the import level of oil-importing countries.

The Biden administration — embroiled in a dispute with the U.S. oil industry over whose debt is $5 per gallon of gas in America — is pushing for a temporary federal gas tax vacation, which is likely to weigh on oil prices as well.

“In addition to a rebound in Libyan output, broader macroeconomic developments, i.e. the increasing risk of a recession hurting demand, have seen the continued tight supply outlook due to sanctions, a spike in summer demand and several OPEC+ producers in recent sessions. having a hard time, more than made up for it. to increase output to the agreed level,” Saxo Bank said in a daily commentary on Wednesday.

“President Biden’s battle against high gasoline prices ahead of the midterm elections has also received some attention, although a potential tax cut on gasoline, while supporting consumers, would support demand, extending the period of tightness,” the strategists said. from the bank.

By Tsvetana Paraskova for Oilprice.com

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