Oil Edges Lower as Slowdown Concerns Eat Into OPEC-Driven Gains

Oil slumped as concerns over a global slowdown and weaker demand vied with a tightening supply outlook after OPEC+ cut output.

West Texas Intermediate traded below $90 a barrel, after falling 1.6% on Monday. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the US and global economies are likely to sink into recession next year, while the International Monetary Fund and World Bank saw rising risks of a slowdown.

There was weakness across markets, with stocks falling, pressured by rising treasury yields, while the dollar climbed to its highest in a month, making commodities priced in the currency more expensive.

Oil hit the lowest level since January last month as slowdown concerns gathered force, only to rebound after the Organization of Petroleum Exporting Countries and its allies responded by reducing output. Investors are gauging the impact of higher interest rates as central banks including the Federal Reserve fight inflation, as well as disruptions caused by the war in Ukraine and the outlook for global supply heading into the northern-hemisphere winter.

“Crude oil trades lower on renewed demand concerns,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Last week’s OPEC driven price jump faded further overnight with the risk sentiment once again souring across markets on worries the global economy, including the US, will face a very challenging 2023.”

Prices:

• WTI for November delivery was 1.7% lower at $89.60 a barrel at 9:19 a.m. in London.
• Brent for December settlement eased 1.6% to $94.69 a barrel.

In China, the world’s largest crude importer, authorities are signaling that there’ll be no let up in the nation’s Covid Zero policy, potentially acting as a brake on energy demand. The approach is sustainable and the country must stick to it as it is key to stabilizing the economy and protecting lives, the Communist Party’s flagship newspaper said in a commentary Tuesday.

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