Thursday, 28 March 2024

Oil prices slip as recession fears rumble on, tight supply stems losses

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Oil prices fell on Monday, paring gains from the previous session, as fears of a global recession weighed on the market, even as supply remains tight amid lower output of OPEC, the riots in Libya and the sanctions on Russia, Reuters reported.

Brent crude futures for September fell 36 cents, or 0.3%, to $111.27 a barrel by 0300 GMT, after rising 2.4% on Friday.

US West Texas Intermediate (WTI) crude futures for August delivery fell 34 cents, or 0.3%, to $108.09 a barrel, after rising 2.5% on Friday.

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“Recession fears are the main bearish factor that has limited the rise in oil prices. Rising rates and falling consumer confidence have weighed on the outlook for fuel demand, while data shows that US oil refinery capacity has improved,” the CMC Markets analyst Tina Teng said.

“Furthermore, a strong USD also weakens commodity markets in general, including crude oil prices.”

US consumer confidence fell to a record low in June despite a marginal improvement in the inflation outlook, as the Federal Reserve said its commitment to rein in inflation was “unconditional” and raised concerns about rate hikes of interest.

Oil supply concerns still linger, preventing further price declines.

“Energy markets remain fraught with specific supply risks that make going short a nervous experience,” said Tobin Gorey, a commodities analyst at Commonwealth Bank.

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