May 29, 2023

Dubai Week

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Oil fell 2% on recession fears and rising US fuel inventories. By Reuters

© Reuters. An aerial view of oil tanks in Oklahoma in a photo from the Reuters archive

NEW YORK (Reuters) – U.S. crude fell nearly $2 a barrel on Thursday, its lowest level since late March, as fears of a possible recession dampen demand for the fuel and U.S. gasoline inventories rose.

Crude futures were down 2.02, or 2.4 percent, at $81.10. U.S. West Texas Intermediate crude futures were down $1.87, or 2.4 percent, at $77.29 a barrel.

Both commodities fell 2 percent on Wednesday and are currently at their lowest levels since the OPEC+ group announced an unexpected production cut.

“Ultimately, one of the big reasons for this decline is the fear of a recession,” said Bob Yawker, managing director of energy futures at Mizuho.

The number of new applications for unemployment benefits rose modestly in the US last week, signaling a gradual weakening in the labor market after the Federal Reserve raised interest rates several times in a year.

Gasoline stocks rose unexpectedly by 1.3 million barrels last week to 223.5 million barrels, the U.S. Energy Information Administration said in a report on Wednesday.

Implied demand for gasoline fell 3.9 percent to 8.5 million barrels per day from a year ago. U.S. crude inventories fell by 4.6 million barrels, but analysts said the decline could be short-lived.

(Prepared by Muhammad Harbush and Mahmoud Abdel-Kawad for the Arabian Bulletin – edited by Mahmoud Abdel-Kawad)

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