PublishedSeptember 7, 2022, 4:56 p.m.
OilFor the first time since February, Brent falls below 90 dollars
The price of a barrel of Brent, the benchmark for crude oil in Europe, is weighed down by fears of economic recession in the midst of a global cost of living crisis.
On Wednesday, a barrel of Brent from the North Sea for delivery in November lost 3.64% to 89.45 dollars. The barrel of American West Texas Intermediate for delivery in October fell, meanwhile, by 3.98%, to 83.42 dollars.
Photo d’illustration/REUTERS
Weighted by fears of economic recession in the midst of a global crisis in the cost of living, Brent, the benchmark for crude oil in Europe, fell below 90 dollars on Wednesday, a first since the beginning of February, before the Russian invasion of Ukraine. Around 3:50 p.m. (Swiss time), a barrel of Brent from the North Sea for delivery in November lost 3.64% to 89.45 dollars. A barrel of US West Texas Intermediate (WTI) for October delivery fell 3.98% to $83.42, slipping below $85 a barrel for the first time since January.
For Craig Erlam, analyst at Oanda, this new fall in prices will test the Organization of the Petroleum Exporting Countries and their allies (OPEC +). “The question is, how long is OPEC+ going to wait and how far will prices go down before the alliance calls one of those emergency meetings that they talked regarding?” he wonders. The alliance mentioned, during its last meeting, possible new discussions before the next meeting on October 5, “to respond if necessary to market developments”.
Reduce production to end price volatility
At the beginning of the week, crude prices were supported by the announcement of OPEC + which decided to reduce its production target for October by 100,000 barrels per day. “The logic behind the OPEC+ cut was to end the recent price decline and address price volatility,” says Stephen Brennock of PVM Energy. For the moment, “it has failed on both counts”, market participants seeing in this reduction “a clear sign of the deterioration of the demand outlook”.
“The specter of a recession that would weigh on demand in the Western world is becoming a reality, as runaway inflation and rising interest rates dampen consumption,” said Stephen Brennock. In China, both exports and imports slowed in August, “the new restrictions to fight once morest the Covid making their effects felt and the heat waves reducing the activity of the factories”, summarizes Susannah Streeter, analyst for Hargreaves Lansdown. “It goes without saying that these restrictions will have a negative effect on fuel demand in the country,” said Stephen Brennock.
Putin threatens to cut off all oil deliveries
Earlier in the session on Wednesday, crude oil prices had briefly risen once more, Russian President Vladimir Putin having threatened to cease all deliveries of hydrocarbons in the event of a price cap, while denying himself to use energy as a “weapon” once morest Europe which fears shortages. On the natural gas market, the Dutch TTF futures contract, the benchmark for the European market, was trading at 224,855 euros per megawatt hour, still falling despite the statements of the Russian president.
(AFP)
