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By Noah Browning
LONDON/NEW YORK (Reuters) – Global oil costs fell to their lowest level since Russia’s invasion of Ukraine in February on Thursday as investors worried about the option of an economic downturn later this year that could torpedo energy demand.
Benchmark Brent crude futures stood at $2. 66, or 2. 75%, at $94. 12, the lowest level since Feb. 18. West Texas Intermediate (WTI) crude futures stood at $2. 34, or 2. 12%, at $88. 54, the lowest level since Feb. 2.
Falling oil costs may bring relief to major customer countries, adding to the United States and European countries, which have suggested manufacturers increase production to make up for shortages of sources and combat runaway inflation.
Oil had risen to more than $120 a barrel in the previous year. An uptick in demand from the darkest days of the COVID-19 pandemic coincided with disruptions at the source as a result of sanctions imposed on Russia’s top manufacturer following its invasion of Ukraine.
Thursday’s sale followed an unforeseen increase in U. S. crude inventories. UU. la last week. Gasoline inventories, the indirect indicator of demand, also showed a wonderful buildup as demand slowed under the weight of gasoline costs by about $5 per gallon, the Energy Information Administration said. .
“It appears that Wednesday’s weakness after weaker-than-expected implied demand for U. S. gas, as well as the breakdown of technical grades on Thursday, have dragged oil lower,” said ubs analyst Giovanni Staunovo.
The call for perspective remains clouded by developing considerations about an economic collapse in the U. S. The U. S. and Europe, over-indebtedness in market economies and a strict COVID-19 0 policy in China, the world’s largest oil importer.
“A break below $90 is now a very genuine possibility, which is remarkable considering the market tension and the few opportunities to ease it,” said Craig Erlam, senior market analyst at Oanda in London.
“But the recession narrative is becoming more and more potent and, if it were to become a reality, it would probably solve some of the imbalance. “
The Bank of England (BoE) raised rates on Thursday and warned of recession risks.
An OPEC deal on Wednesday to raise its production target of 100,000 barrels a day (bpd) in September, equivalent to 0. 1% of global demand, was seen by some analysts as bearish for the market.
OPEC heavyweights Saudi Arabia and the United Arab Emirates are also poised to generate a “significant increase” in oil production if the world were to face a severe crisis this winter, resources close to the thinking of major Gulf exporters said.
(Additional reporting via Laura Sanicola, Richard Valdmanis and Emily Chow; Editing through Bernadette Baum and Kirsten Donovan)