Oil extends fall below $100 as fears of recession intensify

Oil continued its decline as record US inflation and disappointing earnings from Wall Street intensified fears of a recession.

West Texas Intermediate settled below $96 a barrel on Thursday. Earlier, futures breached $91 a barrel, hitting the lowest level since late February when crude began its ascent into triple digits. Broader markets recovered from the day’s lows after Federal Reserve officials calmed traders expecting an even more aggressive pace of rate hikes after a hotter-than-expected monthly inflation report. Oil futures have been in decline since early June on escalating fears the US may be pushed into a recession.

Nonetheless, global oil supply remains strained, as can be seen in timespreads showing a wide premium for immediately available barrels. Goldman Sachs Group Inc. said the market is “screaming” tightness and that this week’s selloff has been driven by low liquidity and technical factors.

“Oil has been the last major risk asset to start falling, as the supply was previously very tight,” said Fawad Razaqzada, market analyst at City Index. “The supply is not plentiful yet, but concerns that demand is going to weaken is what is driving prices right now.”