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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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Oil Capitulates On Global Recession Fears

  • Crude prices fell nearly 5% on Wednesday morning as recession fears continue to dominate the narrative.
  • Oanda senior market analyst Ed Moya: Energy traders appear to be skeptical of any rallies as they digest a plethora of global economic challenges.
  • On Tuesday, more lockdown orders were handed down in Guiyang, and a lockdown in the tech hub of Chengdu was extended. 

Breaking through new technical levels, Brent crude has plummeted nearly 4.6%, below $90, and WTI has plunged to $82, shedding over 5%, as fears of global recession appear to be driving the oil markets into a longer-term spiral downwards. 

As of 12:40 p.m. EST, Brent crude is trading down 4.57% at $88.59 per barrel for a $4.24 change on the day. WTI was trading down 5.01% at $82.53, for a change on the day of $4.35. 

There are no breaking developments driving prices downward, and no new data releases that would normally weigh on oil prices. Any rally in oil prices now is treated with skepticism by traders, rendering upswings brief. 

“Energy traders appear to be skeptical of any rallies as they digest a plethora of global economic challenges, a wrath of uncertainty to supplies, and looming crude demand destruction fears,” Oanda senior market analyst Ed Moya told Bloomberg.

Chinese demand concerns continue to put downward pressure on markets. 

Demand outlook remains a bearish weight on oil prices with China, the largest crude importer in the world, maintaining its zero-COVID lockdown policy that now has some 65 million people under a restricted movement regime.

On Tuesday, more lockdown orders were handed down in Guiyang, and a lockdown in the tech hub of Chengdu was extended. 

Additionally, China’s crude oil imports in August were 1.1 million bpd lower than the year-ago period and its exports were lower than expected, according to energy analytics provider OilX.

Likewise, OPEC+’s symbolic 100,000 bpd production cut for October led to a very temporary rally in oil prices earlier this week. As soon as the market digested the symbolism and returned to fundamentals, oil prices resumed bearish activity. 

By Charles Kennedy for Oilprice.com

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Leave a comment
  • Al Goobi on September 07 2022 said:
    The inventorys of oil is at record low, dont know if recession will help lower oil prices. SPR needs refilling, Saudi is at steep decline. US permian is in steep decline, Iraq is a mess, Libya is a mess.
  • Kris Poole on September 07 2022 said:
    I would also add Ukraine/Russia war will go on until the last Ukrainian, Russia will cut off oil supplies to G7, Iran deal will not happened - 1 step - 2 steps backwards. What happened to the Gulf of Mexico hurricane season?
    I think this year the hurricane season will be very mild if any, because we have the U.S. midterms elections. Even hurricanes know, they have to keep quiet, because Joe Biden needs W.

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