Oil extended a retreat on concern that a slowdown will hurt energy consumption, with Federal Reserve Chair Jerome Powell saying that a US recession is possible as the bank raises rates to tackle inflation.
(Bloomberg) — Oil extended a retreat on concern that a slowdown will hurt energy consumption, with Federal Reserve Chair Jerome Powell saying that a US recession is possible as the bank raises rates to tackle inflation.
West Texas Intermediate fell toward $103 a barrel in early Asian trading after closing on Wednesday at the lowest since since May 12. At present, the US benchmark is on course for its first back-to-back weekly loss since early April and has lost around 15% since the close on June 8.
In testimony to US lawmakers, Powell said while he didn’t see the likelihood of a recession as particularly elevated, it was a possibility. Commodity price hikes were “clearly” connected to the war in Ukraine, he said.
Oil is rapidly giving up its gains in what’s been a volatile quarter as investors attempt to gauge the trajectory of the US economy and its impact on raw materials. China, the world’s biggest importer, is still struggling to move past its recent virus outbreaks. Crude’s retreat has been accompanied by deep losses in other industrial commodities, especially base metals such as copper.
Russia’s war in Ukraine, which has upended oil flows, will extend into a fifth month on Friday. China and India may be buying more Russian oil than the US previously believed, easing a supply crunch in global markets, Cecilia Rouse, chair of President Joe Biden’s Council of Economic Advisers, said Wednesday.
A US industry snapshot pointed to higher inventories. The American Petroleum Institute reported crude holdings rose by 5.6 million barrels last week, while gasoline holdings also climbed, according to people familiar with the data.