Oil prices decline as strong US recession fears loom global markets

Oil prices decline as strong US recession fears loom global markets/Reuters

MINT | August 5, 2024 | 11:25 PM IST | Breaking News | Follow on Google News

Oil prices decline as strong US recession fears loom global markets

Oil prices decline as strong US recession fears loom global markets

Crude oil prices fell on Monday, August 5, after the US stock market indices crashed due to rising fears of an economic recession. The oil price declines were limited to an extent as crude oil supply remains in question from the Libyan supply losses and increasing conflict in the Middle East.

Brent crude futures fell 1 per cent or 76 cents at $76.05 a barrel by 13:35 GMT. The oil prices are trading at the lowest since since January. The U.S. West Texas Intermediate crude fell 1.1 per cent or 77 cents at $72.75.

The U.S. posted the job data on Friday, which fueled the collapse around the asset classes. The market volatility was high following the U.S. job data, and the expectations of the investors did not match the data released.

“Crude oil exhibited significant price volatility, marking its fourth consecutive week of decline following disappointing U.S. job data. Friday’s U.S. Nonfarm Payrolls figures fell short of investor expectations, compounded by a dismal ISM Manufacturing PMI report, which heightened concerns about the health of the U.S. economy,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

Earlier on Monday, the Japanese Yen was trading at 145.43 yen, up 0.8 per cent against the dollar, after hitting a mid-January peak of 145.28 in early deals. Investors feel the weaker dollar is paving the way for the U.S. Federal Reserve to likely cut rates in September this year.

“The Japanese Yen demonstrated a strong gain against the U.S. dollar, exerting additional pressure on oil prices. Concerns over Chinese demand and fears of a U.S. recession continue to weigh on global oil prices. However, a weaker dollar index and hopes for a U.S. Federal Reserve rate cut are providing some support for oil prices at lower levels,” said Kalantri.

The investors aim for the crude oil prices to stay volatile in today’s session as supply concern rises. But the oil losses limits itself as the situation in the Middle Eastern region grows critical to challenge the supply of the commodity.

“We anticipate crude oil prices will remain volatile in today’s session. Crude oil has support at $72.70-$72.00 and resistance at $74.10 to $74.80. In INR terms, crude oil has support at ₹6,050 to ₹5,970 and resistance at ₹6,210 to ₹6,270,” said Kalantri.

Brent Crude is currently trading at $76.44 per barrel as of 4:23 p.m. BST, and WTI crude is trading at $73.10 per barrel as of 11:23 a.m. EDT.

[With inputs from Reuters]

MINT