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The U.S. crude oil benchmark dipped early on Thursday to the lowest level in months, falling below $90 a barrel for the first time since Russia invaded Ukraine at the end of February.
As of 10:30 a.m. ET on Thursday, the U.S. benchmark WTI Crude had fallen by 1.16% on the day and traded at $89.58. The international benchmark, Brent Crude, was also down and trading below $100 per barrel for a second consecutive day, amid a global economic slowdown and fears of recession, which could dent demand growth this year compared to last year. Brent had dropped by 1.44% to $95.36 at 10:30 a.m.
Moreover, the tightness in physical crude markets seems to have eased in recent days, with spot deliveries being traded at smaller premiums.
Oil prices settled 4% lower on Wednesday, to levels seen just before the Russian invasion of Ukraine, after the U.S. Energy Information Administration reported a large build in crude oil inventories of 4.5 million barrels for the week to July 29.
“The main bearish signal for crude appeared to come from the Energy Information Administration’s data showing an unexpected and sizeable build in US commercial crude inventories and a plunge in gasoline demand for the week ended July 29,” Vanda Insights said early on Thursday during Asia trade.
The U.S. inventory build and the growing concerns about oil demand in slowing economies were bigger drivers of oil prices than Wednesday’s decision of OPEC+ to raise the group’s targeted collective oil production by 100,000 barrels per day (bpd) in September, which was largely seen as a non-event by analysts.
“Oil prices are weak in the wake of the OPEC+ meeting, which may have less bearing on the price action than the outlook for the global economy as a possible coming recession impacts the demand outlook,” Saxo Bank strategists said on Thursday.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.