Oil prices fell 6 percent early Wednesday, with Brent below $ 110 a barrel as the market fears an impending recession will reduce global oil demand.
At 9:10 a.m. EST on Wednesday, crude WTI was below $ 105 a barrel and was trading at $ 102.77, up 6.24 percent a day. The international benchmark, Brent Crude, had fallen below the $ 110 threshold and stood at $ 108.18, up 5.70 percent.
A growing number of analysts and economists now say that the Fed’s attempts to curb inflation with aggressive interest rate hikes may not produce the goal of political leaders for a “soft landing” of the northern economy. American and in fact will lead to a recession in a year. or a year and a half.
In addition, the strength of the US dollar is also weighing on oil prices, as a strong green dollar makes oil purchases more expensive for holders of other currencies. A rise in the US dollar could affect the level of imports to oil-importing countries.
The Biden Administration, embroiled in a dispute with the U.S. oil industry over which the price of $ 5 per gallon of gasoline in the United States is to blame, is pushing for a temporary drop in federal tax on gasoline, which is likely to affect oil prices as well.
“In addition to a recovery in Libyan output, broader macroeconomic developments, ie the increased risk of a recession hurting demand, have managed to more than offset a prospect in recent sessions. continued tight supply driven by sanctions, peak demand in the summer and several OPEC + producers struggling to increase production to agreed levels, “Saxo Bank said in a daily comment on Wednesday.
“President Biden’s fight against high petrol prices ahead of the midterm elections has also received some attention, although a possible reduction in the petrol tax, while supporting consumers, would support demand, thus prolonging the tightening period, “the bank’s strategists said.
By Tsvetana Paraskova for Oilprice.com
More main readings from Oilprice.com: