Oil slumped by about $10 a barrel as concerns of a global recession curtailing demand overshadowed a strike by Norwegian oil and gas workers that could cut exports and exacerbate supply shortages.
Global benchmark Brent crude was down $10.65, or 9.4%, at $102.85 a barrel by 12:46 p.m. EDT (1645 GMT). U.S. West Texas Intermediate (WTI) crude fell $9.36, or 8.6%, to $99.07 a barrel from Friday’s close.
“The market is getting tight, but still we’re getting creamed and the only way you can explain that away is fear of recession in every risk asset,” said Robert Yawger, director, energy futures at Mizuho in New York. “You’re feeling the pressure.”
Oil futures sank along with equities, which often serve as demand indicator for crude, as investors fretted about the possibility of an economic downturn as central banks across the world take aggressive actions to limit inflation.
If a recession does hit and takes a significant bite out of energy demand, more wild swing to the downside could be in store, said Andy Lipow, president of Houston-based Lipow Oil Associates.
“The commodity market can be quite unforgiving when you go into a recession and supplies outstrip demand,” Lipow said.
Meanwhile, safe-haven demand for U.S. Treasuries boosted the dollar by about 1.5%, which in turn weighed on greenback-denominated oil as it becomes more expensive for buyers holding other currencies.
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