Crude oil prices tumbled further in early trading on Thursday, after a brief stabilisation overnight crumbled under a new wave of recession fears.
The international oil benchmark, Brent crude, was down $1.09 or 1.8 per cent to $58.39 per barrel, according to Investing.com.
By 8:45 AM ET (1245 GMT), the US West Texas Intermediate, had fallen by 1.2 per cent to $54.55 per barrel, close to its lows for the week.
Fears of a global recession, with all of its attendant effects on oil demand, surged again overnight as Beijing signaled it will retaliate against United States President Donald Trump’s latest initiative to impose tariffs on effectively all US imports from China.
With demand weakening, concerns that the market will slide into another glut are growing. Data released Wednesday by the Energy Information Administration showed a second straight week of rising crude inventories in the US, although analysts suggested that the headline masked an underlying picture of still-strong demand.
Analysts at ING noted that gasoline demand hit a record 9.93 million barrels per day last week.
The stockpile build, they said, was caused largely by lower refinery utilisation rates, which fell by 1.6 percentage points to 94.8 per cent, while imports also rose by over 550 million bpd to average of 7.7 million bpd.
News from abroad also pointed to a worsening supply/demand balance Thursday.
Reports suggested that Iraq, the second-largest oil producer in the Organisation of Petroleum Exporting Countries, continued to pump above its agreed output ceiling in July, producing an average of 4.85 million bpd. That was little changed from June and over 300,000 bpd above its output ceiling.
The figures come only days after the International Energy Agency revised down its forecasts for demand growth this year and next.
Elsewhere, there was a dramatic twist in the tangled negotiations to defuse the tension in the Persian Gulf, as the US Department of Justice sued to impound an Iranian tanker that had been seized by British armed forces in July.
“The US Department of Justice has applied to seize the Grace 1 on a number of allegations which are now being considered,” Bloomberg quoted the Gibraltar government as saying in a statement. The court will hear the matter at 11 AM ET (1500 GMT).
