Oil prices took a sharp dive on Thursday, dropping by about $2 per barrel to their lowest level since late March.
Investors King analysis showed that the decline in oil prices was driven by growing fears that a possible recession could affect fuel demand, as well as a rise in gasoline inventories.
Brent crude oil, the international benchmark for Nigerian oil, fell by $1.98, or 2.4% to trade at $81.14 a barrel at 6:00 om while West Texas Intermediate crude (WTI) futures dropped $2.05, or 2.6%, to $77.11 a barrel.
The fall in oil prices is also being linked to disappointing results from companies such as Tesla, which has impacted equities markets that often move in tandem with oil prices.
According to Bob Yawger, Executive Director of Energy Futures at Mizuho, “At the end of the day, one of the big reasons why we’re sliding is fear of recession.”
The increase in gasoline inventories is another factor contributing to the drop in oil prices. U.S. crude stockpiles fell by 4.6 million barrels, while gasoline inventories jumped unexpectedly, according to the U.S. Energy Information Administration. Implied gasoline demand also fell 3.9% from year-ago levels to 8.5 million barrels a day.
However, there are some positive signs for the oil industry. Economists polled by Reuters expect the U.S. Federal Reserve to end its tightening with a final 25 basis point rate rise in May, easing concerns about a recession in the world’s largest oil-consuming nation.
Meanwhile, persistent double-digit inflation in Britain has bolstered expectations of a further Bank of England rate hike.
While Pakistan has placed its first order for discounted Russian crude under a new deal, which could cover 100,000 barrels per day, according to the country’s petroleum minister.
Oil loading from Russia’s western ports in April is also expected to rise to the highest since 2019, according to trading and shipping sources.
