Oil prices decline on concerns of recession

16 Aug 2022 , 09:06 AM

Tuesday’s decline in oil prices followed the previous session’s decline as fresh worries about a potential global recession that could affect energy consumption were raised by economic data from China, the world’s largest crude importer.

Brent crude futures decreased by $1.00, or 90 cents, to $94.20 a barrel. To reach $88.60 per barrel, WTI crude futures lost 81 cents or 0.9%.

The price of oil futures decreased by nearly 3% the day before.

After China’s poor economic data, prices dropped. Data revealed an unexpected slowdown in the economy in July, with manufacturing and retail activity being constrained by Beijing’s zero-COVID policy and a real estate crisis. The country’s central bank lowered lending rates to boost demand.

After Beijing issued additional quotas in June and July, China’s exports of fuel products will increase in August to almost the highest level of the year so far, analysts and traders predicted. However, broader limitations are expected to cap shipments at seven-year lows for 2022.

According to the U.S. Energy Information Administration (EIA), the overall output of the country’s major shale oil basins would increase to 9.049 million bpd in September, the highest level since March 2020.

An EU official said, according to an ET report, that Iran reacted to the European Union’s “final” draught language to rescue the 2015 nuclear agreement on Monday, but the source gave no further information. The United States was urged by the Iranian foreign minister to be flexible in order to settle the three outstanding issues.