LONDON, Aug 5 (Reuters): Oil fell on Monday, trailing a stock market selloff sparked by fears of a US recession, though declines were limited by Libyan supply losses and worries that spreading conflict in the Middle East could further hit crude supplies.
Share markets tumbled across Asia as US recession fears sent investors rushing from risk assets while wagering that rapid interest rate cuts will be needed to drive economic growth.
Brent crude futures were down 76 cents, or 1.0 per cent, at $76.05 a barrel by 1335 GMT, with prices earlier trading around their lowest since January. US West Texas Intermediate crude was down 77 cents, or 1.1 per cent, at $72.75.
Supply concerns limited losses. Libya's biggest oil field Sharara has fully halted output, Bloomberg reported. Two field engineers told Reuters on Saturday that local protesters had partially shut down the site.
US recession concerns stoked by Friday's weak July payrolls report "only add to Chinese demand concerns that have been lingering in the oil market for some time", ING analysts led by Warren Patterson said in a note.
Slumping diesel consumption in China, the world's biggest contributor to oil demand growth, is also weighing on oil. The decline in oil prices closely trailed falls in European stock markets.
Oil's losses were also limited by geopolitical risks in the Middle East. Fighting in Gaza continued on Sunday, a day after an unsuccessful round of ceasefire talks in Cairo.
Israel and the US are bracing for a serious escalation in the region after Iran and its allies Hamas and Hezbollah pledged to retaliate against Israel for the killings of Hamas's leader and a top Hezbollah military commander last week.
"The risk of a wider regional war, while I still think is small, can't be ignored," said Sydney-based IG market analyst Tony Sycamore.
Oil prices drop as US recession fears spark broader selloff
FE Team | Published: August 05, 2024 22:54:52
Oil prices drop as US recession fears spark broader selloff
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