Brent crude LCOc1 dropped 10 cents, or 0.1%, to $94.02 a barrel by 0047 GMT, while U.S. West Texas Intermediate crude CLc1 was at $88.48 a barrel, down 6 cents.
SINGAPORE: Oil prices extended losses on Friday, after hitting their lowest since before Russia's February invasion of Ukraine in the previous session, as the market fretted over the impact of inflation on global economic growth and demand.
Brent crude LCOc1 dropped 10 cents, or 0.1%, to $94.02 a barrel by 0047 GMT, while U.S. West Texas Intermediate crude CLc1 was at $88.48 a barrel, down 6 cents.
"Crude oil fell further on demand concerns on a cloudy economic outlook," CMC Markets analyst Tina Teng said. "If commodities are not pricing in an imminent economic recession, they might be preparing for a 'stagflation' era when the unemployment rate starts picking up and inflation stays high."
Recession worries have intensified following the Bank of England's warning of a drawn-out downturn after it raised interest rates by the most since 1995.
Investors are focused on the U.S. employment report to be released later in the day, which is expected to show nonfarm payrolls increased by 250,000 jobs last month, after rising by 372,000 jobs in June.
Any signs of strength in the labour market could feed into fears of aggressive steps by the Fed to curb inflation.
"There are signs that high prices have taken the edge off gasoline and distillate demand," ANZ analysts said in a note.
U.S. gasoline demand fell around 7% on year in July while China's zero-COVID strategy is pushing recovery in the world's No.2 economy further out, they added.
Still, the global crude oil markets remained firmly in backwardation, where prompt prices are higher than those in future months, indicating tight supplies.
Supply concerns are expected to ratchet up closer to winter with the European Union sanctions banning seaborne imports of Russian crude and oil products set to take effect on Dec. 5.
OPEC leaders Saudi Arabia and the United Arab Emirates stand ready to deliver a "significant increase" in output should the world face a severe supply crisis this winter, sources familiar with the thinking of the top Gulf exporters said.
For September, OPEC+ is set to raise its oil output goal by 100,000 barrels per day. The hike is one of the smallest since OPEC quotas were introduced in 1982, OPEC data shows.- Reuters
Earlier report:
Oil prices hit lowest since Ukraine invasion amid recession fears
LONDON/NEW YORK: Global oil prices dropped on Thursday to their lowest levels since before Russia's February invasion of Ukraine, as traders fretted over the possibility of an economic recession later this year that could torpedo energy demand.
Benchmark Brent crude LCOc1 futures settled down US$2.66, or 2.75%, at $94.12, the lowest close since Feb. 18. West Texas Intermediate (WTI) crude CLc1 futures settled down $2.34, or 2.12%, at $88.54, the lowest close since Feb. 2.
The fall in oil prices could come as a relief to large consumer nations including the United States and countries in Europe, which have been urging producers to ramp up output to offset tight supplies and combat raging inflation.
Oil had surged to well over $120 a barrel earlier in the year. A sudden rebound in demand from the darkest days of the COVID-19 pandemic coincided with supply disruptions stemming from sanctions on major producer Russia over its invasion of Ukraine.
Thursday's selling followed an unexpected surge in U.S. crude inventories last week. Gasoline stocks, the proxy for demand, also showed a surprise increase as demand slowed under the weight of gasoline prices near $5 a gallon, the Energy Information Administration said.
"Seems the weakness from Wednesday following weaker than expected U.S. implied gasoline demand, together with the break of technical support levels on Thursday, has dragged oil lower," said Giovanni Staunovo, an analyst at UBS.
The demand outlook remains clouded by increasing worries about an economic slump in the United States and Europe, debt distress in emerging market economies, and a strict zero COVID-19 policy in China, the world's largest oil importer.
"A break below $90 is now a very real possibility, which is quite remarkable given how tight the market remains and how little scope there is to relieve that," said Craig Erlam, senior market analyst at Oanda in London.
"But recession talk is getting louder and should it become reality, it will likely address some of the imbalance."
The Bank of England (BoE) raised interest rates on Thursday and warned about recession risks.
An OPEC+ agreement on Wednesday to raise its output target by 100,000 barrels per day (bpd) in September, equivalent to 0.1% of global demand, was viewed by some analysts as bearish for the market.
OPEC heavyweights Saudi Arabia and the UAE are also ready to deliver a "significant increase" in oil output should the world face a severe supply crisis this winter, sources familiar with the thinking of the top Gulf exporters said. - Reuters
