The fear of a recession. The courses of oil dived on Tuesday. At issue: fears of a recession in crude-consuming countries. At the close of European markets, a barrel of Brent from the North Sea plummeted 9.05% to 103.23 dollars. The American barrel fell 8.48% to 99.24 dollars, slipping below 100 dollars a barrel. It had been selling above this symbolic price for two months.
“Recession fears are reducing the outlook for oil demand and driving down prices,” said Ipek Ozkardeskaya, analyst for Swissquote. Oil having crossed this important “psychological threshold”, the analyst evokes the possibility of a drop in prices until a next fateful level, that of 85 dollars a barrel.
Recession looms in the eurozone
In a recession scenario, Citi analysts even suggest that oil prices would fall to 65 dollars a barrel by the end of the year, then to 45 dollars in the absence of intervention by the Organization of oil exporting countries.
The oil market is “turning away from inflation” and heading towards “economic desperation”, says Stephen Innes, analyst at Spi Asset Management. “PMI indices highlight the risks of recession in the zone euro “, argues Neil Wilson, analyst at Markets.com, for whom” the recession seems inevitable “. Growth in economic activity in the euro zone slowed sharply in June in the private sector, to its lowest level in sixteen months, according to the final composite PMI index published on Tuesday by S&P Global.
Metals also down
Fears of a global recession also continue to dominate industrial metals markets, including the copper. The red metal is very sensitive to a potential slowdown in global economic activity, serving as a barometer of the economy.
The LME Index, an index that incorporates the prices of aluminium, copper, lead, nickel, tin and zinc traded on the London Metal Exchange, has lost more than 15% since the start of the ‘year.