Brent oil futures slid 2.26% to $109.11 a barrel as wider markets were pressured by the growing risks of an economic slowdown and Citigroup said prices could fall if there is a recession. WTI oil futures slid 3.14% to $105.02 a barrel.
Prices were under pressure on Tuesday as equities fell and the dollar surged, making commodities priced in the currency less attractive. Citigroup Inc. said that crude could fall to $65 this year in the event of a recession, a call in stark contrast to JPMorgan Chase & Co.’s most bullish $380 a barrel scenario.
While futures have been pressured by the threat of a global economic slowdown, key market timespreads remain robust, indicating that there’s solid demand for near-term supplies. A strike in Norway and supply disruption in Libya have exacerbated that strength of late.
“Tightness continues to be offset by recession and demand worries, and now also additional dollar strength,” said Ole Hansen, head of commodities strategy at Saxo Bank.
Oil’s rally has prompted western leaders to demand the Organization of Petroleum Exporting Countries, including Saudi Arabia and its allies pump more. The kingdom hiked its official selling prices to Asia on Tuesday. Its flagship Arab Light crude price will be $9.30 above its regional benchmark in August, an increase of $2.80.
In welcome news for Biden, retail gasoline prices in the US have eased from a record above $5 a gallon in mid-June. Pump prices were near $4.80 on Sunday, according to figures from auto club AAA, after slipping for 20 consecutive days in the longest losing run in more than two years.