NEW YORK, USA (AFP) – Brent oil futures closed below $100 a barrel for the first time in three months on Tuesday, as recessionary fears cloud near-term demand prospects for crude oil.
The international benchmark contract for September delivery fell 7.1 percent to $99.49 a barrel as the market focused on concerns about further China restrictions on Covid-19 and a slowdown in Europe and the US.
US benchmark West Texas Intermediate fell 7.9% to close at $95.84 a barrel.
The fall of Brent below the psychologically important level of $100 occurred shortly after the euro fell to parity with the US dollar. For the first time in nearly 20 years, Russia has cut off gas supplies to Europe, heightening fears of a recession in the eurozone.
The fall in the foreign exchange market “raises fears that Europe is entering a recession and that they will have to raise interest rates, which could reduce demand for oil,” said Andy Lipow of Lipow Oil Associates. “There are also concerns about the shutdown of China.”
Despite fears of a worsening economic outlook, analysts warn that global oil inventories remain low by historical standards, meaning the market will struggle to meet demand in the event of a supply disruption.
© Agence France-Presse