Oil prices fell sharply on Thursday on concerns about outlook for energy demand amid rising worries about a possible recession.
Oil prices rose early on in the session as the dollar weakened, but failed to hold gains, weighed down by Wednesday’s data that showed an unexpected surge in crude stockpiles in the U.S. last week, and the oil producer group OPEC+’s nod for a small increase in production.
West Texas Intermediate Crude oil futures for September ended lower by $2.12 or about 2.3% at $88.54 a barrel, settling below the $90 a barrel mark for the first time since early February.
Data released by U.S. Energy Information Administration (EIA) showed crude stockpiles in the U.S. rose by 4.5 million barrels last week versus expectations for a draw of 630,000 barrels.
Gasoline stockpiles increased by 163,000 barrels last week, as against expectations for a drop of 1.61 million barrels, offering fresh signs of weakening demand in the United States during the peak summer driving season.
The Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to increase production by 100,000 barrels per day in September amid flagging global demand and China’s strict COVID-19 restrictions.
Cleveland Federal Reserve Bank President Loretta Mester said today that the risks of recession have risen. He reiterated the central bank’s resolve to continue with aggressive tightening until there is compelling evidence of a let up in inflation.
Traders looked ahead to the Labor Department’s jobs data, due on Friday. The report is expected to show employment increased by 250,000 jobs in July after jumping by 372,000 jobs in June. The unemployment rate is expected to hold at 3.6%.
The strength of the jobs report could impact the outlook for interest rates, although the Federal Reserve will have much more data to digest before their next meeting in September.
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