Oil prices fall across the world as recession worries persist
- Oil supply remained tight due to decreased OPEC output, turmoil in Libya and sanctions on Russia
- Brent crude futures for September fell 36 cents, or 0.3%, to $111.27 a barrel
- U.S. West Texas Intermediate (WTI) crude fell by 34 cents or 0.3% to $108.09 per barrel
Oil prices dipped on Monday, reversing the prior session's gains, as worries of a worldwide recession weighed on the market, despite the fact that supply remained tight due to decreased OPEC output, turmoil in Libya, and sanctions on Russia.
Brent crude futures for September fell 36 cents, or 0.3%, to $111.27 a barrel after rising 2.4% the previous session.
Following a 2.5% increase on Friday, the price of U.S. West Texas Intermediate (WTI) crude for August delivery fell by 34 cents, or 0.3%, to $108.09 per barrel.
"The recession fears are the primary bearish factor that has capped the surge in oil prices. Rising rates and a plunge in consumer confidence have dented the fuel demand outlook, while data shows that the U.S. petroleum refinery capacity has improved," said CMC Markets analyst Tina Teng.
"In addition, a strong USD also weakens broad commodity markets, including crude prices," She added
Consumer morale in the United States fell to a historic low in June, despite a modest improvement in the forecast for inflation, as the Federal Reserve stated that its commitment to containing inflation was "unconditional," raising fears of interest rate hikes. Oil supply fears persist, barring further price drops.
According to a Reuters poll, output from the Organization of the Petroleum Exporting Countries (OPEC) decreased 100,000 barrels per day (BPD) in June to 28.52 million BPD, falling short of their planned rise of approximately 275,000 BPD.
As Libya risks greater supply interruption owing to rising political upheaval, declines in Nigeria and Libya cancel out increases by Saudi Arabia and other major producers, making it even less probable that OPEC will reach its recently enhanced production targets, ANZ Research analysts told Reuters.
The National Oil Corp reported last week that Libya's exports have decreased to between 365,000 and 409,000 BPD, which is around 865,000 BPD below normal levels.
In an additional blow to supplies, according to Reuters, a planned strike by Norwegian oil and gas employees this week may reduce the nation's output of oil and condensate by 130,000 BPD.