Fears of a recession cause oil prices to drop, but worries about supply keep prices from falling too much

Image: Reuters Berita 24 English - Oil prices went down on Monday because people are worried that a global recession will slow the growth o...

Image: Reuters

Berita 24 English - Oil prices went down on Monday because people are worried that a global recession will slow the growth of fuel demand. However, declines were limited by worries about supply ahead of the EU's ban on Russian oil in December.

By 07:01 GMT, Brent crude futures for November had dropped 46 cents, or 0.5%, to $90.89 per barrel.

The price of a barrel of U.S. West Texas Intermediate (WTI) crude for delivery in October went down by 65 cents, or 0.8%, to $84.46. Tuesday is the last day for the October WTI contract, and the more active November contract is now worth $84.12, which is down 64 cents.

Monday morning, both contracts went up by more than $1. Last week, oil futures fell more than 1% because people were worried that if the Federal Reserves raised interest rates again, it would slow down growth around the world.

Monday was a good day for the dollar, as investors got ready for a busy week of central bank meetings that are sure to raise borrowing costs around the world, with the possibility of a huge increase in the United States. When the U.S. dollar gets stronger, goods priced in dollars become more expensive for people who use other currencies.

Even though people worried that this would cut down on fuel demand, ongoing worries about supply kept prices from going down.

"The start of European sanctions on Russian oil is still a cloud over the market. When the supply is cut off in early December, U.S. producers aren't likely to respond quickly to the market, "On Monday, analysts at ANZ said.

Easing COVID- Analysts said that 19 restrictions in China could also give some reason to be hopeful.

China has started to loosen COVID limits in Chengdu, a city in the southwest with more than 21 million people. This has helped to ease worries about demand in the world's second-biggest energy consumer. After Beijing gave out new quotas, China's exports of gasoline and diesel also went up, which helped lower the country's high stockpiles.

Also, the head of Kuwait Petroleum Corporation (KPC) said on Sunday that its customers still want the same amount of oil. He said that the Gulf state is meeting its OPEC quota by making more than 2.8 million barrels of oil per day.

Basrah Oil Company said on Saturday that oil loading and exporting operations at Iraq's Basrah oil terminal are back to normal after being stopped the day before because of a spill that has now been stopped.

A spokesperson for Shell said on Sunday that the 200,000 barrels per day Bonga deep water storage and offloading vessel will be serviced in October.