Oil drops $6 as recession fears deepen demand concerns

FE Team | Published: July 05, 2022 22:50:47

LONDON, July 5 (Reuters): Oil prices dropped $6 on Tuesday as concerns about a possible global recession curtailing demand outweighed supply disruption fears, highlighted by an expected production cut in Norway.
Brent crude was down $6.65, or 5.9 per cent, at $106.85 a barrel by 1344 GMT, and US West Texas Intermediate (WTI) crude fell $5.65, or 5.2 per cent, to $102.78 a barrel from Friday's close. There was no WTI settlement on Monday because of a US holiday.
Investors are becoming more concerned as the latest surge in gas and fuel prices adds to worries about recession.
"Oil is still struggling to break out from its current recessionary malaise as the market pivots away from inflation to economic despair," Stephen Innes of SPI Asset Management wrote.
In the euro zone, data showed business growth across the bloc slowed further last month, with forward-looking indicators suggesting the region could slip into decline this quarter as the cost of living crisis keeps consumers wary.
In South Korea, inflation hit a near 24-year high in June, adding to concerns about slowing economic growth and oil demand.
Supply concerns still linger, initially lifting WTI and Brent earlier in the session, amid worries about potential output disruption in Norway, where offshore workers began a strike.
The strike is expected to reduce oil and gas output by 89,000 barrels of oil equivalent per day (boepd), of which gas output makes up 27,500 boepd, Norwegian producer Equinor has said.