By Adedapo Adesanya
Oil prices traded mixed on Thursday as concerns remain about a potential global recession that would knock energy demand, with the Brent crude futures growing by 52 cents to settle at $107.14 a barrel and the United States West Texas Intermediate crude (WTI) falling by 84 cents to $96.42 a barrel.
The US economy unexpectedly contracted in the second quarter, with consumer spending growing at its slowest pace in two years.
It is also fuelling concerns about a recession – a signal that would affect demand in one of the world’s largest oil-consuming nations.
This could deter the Federal Reserve from continuing to aggressively increase interest rates as it battles high inflation. The US central bank on Wednesday raised its policy rate by another three-quarter of a percentage point, bringing the total rate hikes since March to 225 basis points.
However, analysts note that in terms of demand and supply numbers for oil, the market is below average on supply while demand is holding up better than anticipated.
Investors focused on US oil data from the Energy Information Administration (EIA) on Wednesday that showed crude stockpiles fell by 4.5 million barrels last week, beating projections.
The Group of Seven richest economies aims to have a price-capping mechanism on Russian oil exports in place by December 5, a move that will heighten tension between Russia and the West, as the former continues to face pressure following its invasion of Ukraine in February.
Meanwhile, Russia has cut gas supplies via Nord Stream 1, its main gas link to Europe, to just 20 per cent of capacity. That could lead to switching to crude from gas and prop up oil prices in the short term.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) will consider keeping oil output unchanged for September when they meet next week, despite calls for more supply, although a modest output increase is also likely to be discussed.
OPEC’s Joint Technical Committee (JTC) meeting will be held next week on Tuesday (August 2), with the Joint Ministerial Monitoring Committee (JMMC) meeting scheduled for Wednesday (August 3) and the full OPEC+ Ministerial meeting will follow immediately after the JMMC meeting.
