Oil prices on Monday continued their decline of the past week due to an increasingly bleak economic outlook, raising concerns about demand for crude.
By 10:00 GMT (12:00 in Paris), a barrel of North Sea Brent crude for November delivery was down 0.68% to $85.56.
The barrel of U.S. West Texas Intermediate (WTI) for delivery in the same month, lost 0.72% to 78.17 dollars. “The price of oil has retreated significantly from the highs of the past few months,” commented Richard Hunter, an analyst at Interactive Investor.
“The combination of a stronger dollar and a perceived lack of demand due to recession fears has pushed the price down,” he continues, although this price decline also reduces “an element of inflationary pressure.”
Crude is “on track to lose all the gains of 2022 (…) due to the deteriorating global economic outlook and the rising dollar,” supports John Plassard, analyst at Mirabaud.
Since the beginning of 2022, Brent crude is up about 9%, and its US counterpart WTI about 3%, a far cry from their March peaks of $139.13 and $130.50 respectively, nearing their all-time highs a few days after the war in Ukraine began.
If the Russian invasion of Ukraine was the main driver of the peaks reached by black gold in March because of a possible lack of hydrocarbon supply, for analysts it is now responsible for the fall in prices, having “pushed the world to the brink of recession”, believes Tamas Varga, of PVM Energy.
The rise in commodity prices has significantly increased the cost of living and several major central banks are trying to extinguish “by all means” these “inflationary fires”, he continues, with aggressive tightening of their monetary policy as in the United States last week.
The OECD (Organisation for Economic Co-operation and Development) has revised its global growth forecast for next year sharply downwards due to the longer than expected consequences of the war in Ukraine, especially in the euro zone, and the increase in interest rates by central banks to contain inflation.
Some countries, such as the United Kingdom, are already in recession, according to the Bank of England or the S&P Global Flash Composite PMI, while many others are very close to it.
