Oil settles below $90 as recession fears grow

An oil pump jack pumps oil in a field near Calgary, Alberta, Canada, July 21, 2014. REUTERS/Todd Korol/File Photo

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Sep 7 (Reuters) – Oil prices slumped on Wednesday, falling below levels seen before Russia invaded Ukraine as downbeat Chinese trade data fueled investor worries about recession risks.

Brent crude futures settled at $4.83 to $88 a barrel, falling below $90 a barrel for the first time since Feb. 8.

“Right now, the market is basing its concerns on what will happen due to the sharp rise in energy prices in Europe, the slowdown in demand in Europe and the rise in interest rates,” he said. said Phil Flynn, analyst at Price Futures Group.

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Several global central banks are expected to keep rate hikes on hold to fight inflation, but economists said the United States appeared better positioned to weather the storms. This propelled the dollar to a 24-year high against the yen and a 37-year high against the pound. The strength of the greenback is putting pressure on oil prices, since most global oil sales are in dollars.

The European Central Bank is expected to raise interest rates sharply at its meeting on Thursday. A US Federal Reserve meeting will follow on September 21. read more

The Bank of Canada raised interest rates by three-quarters of a percentage point on Wednesday, as expected, to a 14-year high, and said the key rate should rise further to combat runaway inflation.

Weak economic data from China and its strict zero COVID policy added to demand concerns. Its crude oil imports in August fell 9.4% from a year earlier, according to customs data. Read more

The prices have drawn some support from Russian President Vladimir Putin to halt the country’s oil and gas exports if price caps are imposed.

The European Union offered to cap Russian gas hours later, raising the risk of rationing in some of the world’s wealthiest countries this winter. Russia’s Gazprom has halted flows from the Nord Stream 1 gas pipeline, cutting off a substantial percentage of supply to Europe. Read more

The rating agency Fitch said on Tuesday that the shutdown of the Nord Stream 1 gas pipeline increases the likelihood of a recession in the euro zone.

U.S. crude inventories are expected to have fallen for the fourth consecutive week, falling by about 733,000 barrels in the week to September 2, according to a preliminary Reuters poll. The American Petroleum Institute releases its report on Wednesday, a day later than usual due to a Monday holiday.

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Additional reporting by Rowena Edwards Additional reporting by Isabel Kua in Singapore Editing by Jan Harvey, David Goodman and David Gregorio

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