Oil Tumbles 9% On Recession Demand Destruction Fears

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Oil plummeted about 9% in the biggest daily drop since March on growing fears of a global recession and lockdowns in China that could slash demand.

Global benchmark Brent crude settled at $102.77 a barrel, losing $10.73, or 9.5%. U.S. West Texas Intermediate (WTI) crude ended8.2%, or $8.93, lower at $99.50 a barrel. There was no WTI settlement on Monday because of a U.S. holiday.

Both benchmarks logged their biggest daily percentage decline since March 9 and hit share prices of major oil and gas companies. Oil futures sank along with natural gas, gasoline and equities, which often serve as demand indicator for crude. Meanwhile, mass COVID-19 testing in China stocked fears of potential lockdowns that threaten to deepen cuts to oil consumption.

Concerns that U.S. summer driving season demand would fall off after the Fourth of July holiday also appeared to weigh on the market, Kissler said. The Dow Jones Industrial Average (.DJI) slipped about 1% while the S&P 500 Index fell less than 1%. U.S. prices for natural gas dropped 4.7%, heating oil fell about 8% and gasoline for delivery at New York Harbor fell 10.5%.

In South Korea, inflation hit a near 24-year high in June, adding to concerns about slowing economic growth and oil demand. Meanwhile, Russia’s former President Dmitry Medvedev said a reported proposal from Japan to cap the price of Russian oil at about half its current level would mean less oil on the market and could push prices above $300-$400 a barrel.

-Reuters.

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