Oil Tumbles Amid Recession Fears

The price of oil fell to its lowest levels in almost three months on Tuesday as recession fears gripped markets, outweighing fundamentally tight supply conditions.

Crude settled below $100 on Tuesday after falling more than 12 %, the most since March 9. Increasing fears that a global economic slowdown will ultimately hurt demand caused a risk-off sentiment to spread throughout markets.

Oil prices have been under pressure in the past month as central banks aggressively raise interest rates. Although physical barrels fetch enormous premiums, they are not cheap. Saudi Arabia hiked its official selling prices to Asia on this Tuesday. Its flagship Arab Light crude price will be $9.30 above its regional benchmark in August, an increase of $2.80.

News media, experts and economists are expressing their idea of recession. A growing number of analysts are expecting that many of the world’s leading economies will suffer negative growth in the next few months, and this will drag the US into a recession.

Crude prices have slumped as weakening demand concerns are starting to outweigh fears about tight supply. A mass Covid test was launched in nine districts in Shanghai after cases were discovered the past two days, raising doubts about the demand recovery in one of the world’s biggest oil-consuming nations. Several infections were reported by the city Sunday and Monday, raising concerns about additional lockdowns.

Trade recommendation for this week, oil investors could buy and sell in the range $97-$110.

Analyzed by: Mr. Nhim Kosol Business Manager of PP Link Securities

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