Adedapo Adesanya
By Adedapo Adesanya
Brent crude futures and the US West Texas Intermediate (WTI) crude futures depreciated on Thursday to their lowest level since late March, dragged lower by fears a possible recession could dent fuel demand.
While Brent went down by $2.02 or 2.4 per cent to settle at $81.10 per barrel, the WTI shed $1.87 or 2.4 per cent to trade at $77.29 per barrel.
Both benchmarks fell 2 per cent on Wednesday and are at their lowest since just before a surprise OPEC+ production cut announcement.
The number of Americans filing new claims for unemployment benefits increased moderately last week, indicating the labour market was slowing after a year of interest rate hikes by the US Federal Reserve and fanning concerns about a slowdown in fuel demand.
The loss of labour market momentum added to slumping retail sales and manufacturing activity, heightening the risks of a recession as soon as the second half of the year.
This is happening as banks have tightened lending, which could make it harder for households and small businesses to access credit, making it harder for oil demand.
In the United Kingdom, persistent double-digit inflation has bolstered expectations of a further Bank of England rate hike.
UK inflation slowed last month but held above 10 per cent on soaring food prices, official data showed Wednesday, further fuelling a cost-of-living crisis despite a series of aggressive interest-rate hikes.
US crude stockpiles, meanwhile, dropped by 4.6 million barrels, but analysts said that decline could be short-lived.
Easing some concern about a rate hike-induced recession in the world’s largest oil-consuming nation, there are expectations that the US Federal Reserve will end its tightening with a final 25 basis point rate rise in May.
However, if the US central bank fails to bring down inflation sustainably, the ultimate pain will likely be much worse 12-24 months down the road.
On the supply side, oil loading from Russia’s western ports in April is likely to rise to the highest since 2019, trading and shipping sources said.
Meanwhile, Pakistan has placed its first order for discounted Russian crude under a new deal which could cover 100,000 barrels per day, the country’s petroleum minister said.
