Oil tumbles on recession worries as US stocks rebound




TEXAS CITY, TEXAS – SEPTEMBER 07: In an aerial view, an oil refinery is seen on September 07, 2022 in Texas City, Texas. Oil and gas companies in Texas have sent more than $10 billion in oil and natural gas production taxes to the state this year according to the state comptroller. Brandon Bell/Getty Images/AFP (Photo by Brandon Bell / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

 

NEW YORK< United States (AFP) — US oil prices finished Wednesday at their lowest level since January on growing recession fears, while US stocks rebounded after a weak stretch left the market “oversold,” as analysts put it.

Oil prices briefly climbed early on Wednesday as Russia’s President Vladimir Putin said his country would stop delivering oil and gas supplies to countries that introduce price caps.

But then oil prices then turned sharply lower, with Brent crude, the main international contract, passing under $90 per barrel for the first time since February.

US benchmark West Texas Intermediate slid 5.7 percent to end at $81.94, its lowest closing price since January.

“The oil market is a blood bath as the crude demand outlook took a major hit after Chinese and US trade data showed global demand is sharply weakening,” said Oanda’s Edward Moya.

“It appears the risk of losing Russian energy supplies is no longer keeping oil prices supported and that has energy traders solely fixated on the demand side drivers.”

(FILES) In this file photo taken on April 27, 2022 the logo of Russia’s energy giant Gazprom is pictured at one of its petrol stations in Sofia, Bulgaria. – Russia has halted gas deliveries to Germany via a key pipeline for an indefinite period, after saying on September 2, 2022 that it had found problems in a key piece of equipment, a development that will worsen Europe’s energy crisis. Russian gas giant Gazprom said Friday that the Nord Stream pipeline due to reopen at the weekend would remain shut until a turbine is repaired. In a statement, Gazprom indicated it had discovered “oil leaks” in a turbine during a planned three-day maintenance operation. Gazprom added that “until it is repaired… the transport of gas via Nord Stream is completely suspended”. (Photo by Nikolay DOYCHINOV / AFP)

Recession concerns also dampened sentiment towards equities, but Briefing.com analyst Patrick O’Hare said those worries were competing for investors’ attention with “the idea that the stock market is oversold on a short-term basis and due for a bounce”.

US stocks finished firmly higher, with the S&P 500 winning 1.8 percent.

On Wednesday, Federal Reserve Vice Chair Lael Brainard warned that the US central bank will stay the course on its aggressive fight against high inflation “for as long as it takes” to bring prices down.

She said interest rates need to rise further, again knocking down hopes of a rate cut next year as the economy slows.

The aggressive Fed posture has bolstered the dollar, which rose further against the Japanese yen even as it retreated against the euro.

“The reason that we are seeing this much strength in the dollar against the yen is purely because of the difference in two central banks’ policies,” noted Naeem Aslam, chief market analyst at AvaTrade.

“The Fed is as hawkish as it can be, and the BoJ still doesn’t seem to be bothered much about inflation or changing its stance on monetary policy.”

Japan’s finance minister, Shunichi Suzuki, on Wednesday expressed concern about the yen’s drop.

“For now, we’re monitoring with a sense of urgency how it’s developing, but if this continues, it makes sense that we will take necessary measures,” he said, without detailing what the measures might be.

– Key figures at around 2110 GMT –
Brent North Sea crude: DOWN 5.2 percent at $88.00 per barrel

West Texas Intermediate: DOWN 5.7 percent at $81.94 per barrel

New York – Dow: UP 1.4 percent at 31,581.28 (close)

New York – S&P 500: UP 1.8 percent at 3,979.87 (close)

New York – Nasdaq: UP 2.1 percent at 11,791.90 (close)

London – FTSE 100: DOWN 0.9 percent at 7,237.83 (close)

Frankfurt – DAX: UP 0.4 percent at 12,915.97 (close)

Paris – CAC 40: FLAT at 6,105.92 (close)

EURO STOXX 50: UP 0.1 percent at 3,502.09 (close)

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,430.30 (close)

Hong Kong – Hang Seng Index: DOWN 0.8 percent at 19,044.30 (close)

Shanghai – Composite: UP 0.1 percent at 3,246.29 (close)

Dollar/yen: UP at 143.79 yen from 142.80 yen on Tuesday

Euro/dollar: UP at $1.0012 from $0.9904

Pound/dollar: UP at $1.1535 from $1.1520

Euro/pound: UP at 86.74 pence from 85.97 pence

 

© Agence France-Presse



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