Oil Drops as Mounting Recession Fears Weigh On Risky Assets
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(Bloomberg) -- Oil prices fell as fears of a global economic slowdown persisted.
West Texas Intermediate fell as much as 3.7% before paring losses to trade near $74 a barrel. Oil’s decline tracked with a generalized gloomy consensus that pushed markets across the globe lower amid concern the resolve of central banks to continue their fight against inflation will tip economies into recession.
Adding to bearish pressure, portions of the Keystone pipeline were now running at reduced pressure. The restarted section sends Canadian crude to US Midwest refineries.
Oil has suffered a rocky end to the year as slack physical markets and limited disruption to supply from Russia weigh on prices. While the outlook has brightened in recent days as US inflation figures slowed and China looked set to reopen its economy, central banks struck a hawkish tone at key interest rate decisions this week.
While crude has weakened in the past few months, oil prices may rally next year due to the sanctions squeeze on Russia’s oil supply. There have been signs that Russian flows to Asia are dipping because of the price cap.
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