Brent crude futures extended declines for a third session on Thursday, slipping under $100 a barrel, as fears of a potential global recession spurred concerns about oil demand.
Brent crude futures fell 94 cents, or 0.9%, to $99.75 a barrel by 0231 GMT after tumbling to a session low of $98.50 earlier. WTI crude futures slid 79 cents, or 0.8%, to $97.74 a barrel.
Both benchmarks closed on Wednesday at their lowest since April 11. The declines follow a dramatic fall on Tuesday despite tight global supplies. WTI slid 8% while Brent tumbled 9% — a $10.73 drop that was the third biggest for the contract since it started trading in 1988.
“Oil is getting decimated with little new information about production or consumption,” said Stephen Innes, managing partner of SPI Asset Management.
“Still, with commodity traders turning very risk-averse due to growing demand and still hawkish (U.S.) Fed policy concerns, the recessionary headline risk is like an anvil around the market’s neck.”
Oil prices have slid alongside other commodities such as metals and palm oil as central banks across the world raised interest rates to battle inflation, fanning fears of recession that could dampen demand for commodities.
“It seems as though the market is starting to price in that scenario,” Warren Patterson, ING’s head of commodity research said, referring to recession.
However, he added that it’s hard to be overly bearish on oil prices as the Brent monthly spreads remain in wide backwardation, indicating tight supplies. Prompt prices are higher than those in future months in a backwardated market.
Traders are watching for possible oil supply disruption at the Caspian Pipeline Consortium (CPC), which has been told by a Russian court to suspend activity for 30 days. Exports at CPC, which handles about 1% of global oil supplies, were still flowing as of Wednesday morning.
In addition, investors awaited U.S. government data due on Thursday that will shed light on the state of domestic oil and fuel inventories.
Industry data on Wednesday showed that U.S. crude inventories rose by about 3.8 million barrels last week, according to market sources. Gasoline inventories fell by 1.8 million barrels, while distillate stocks fell by about 635,00 barrels.