Oil prices fall more than 3% on recession concerns

Oil prices fell more than 3% on Friday as global recession fears and weak oil demand, especially in China, outweighed support from a major cut in OPEC+ supply target.

Brent crude futures fell $2.94, or 3.1%, to $91.63 a barrel, while US West Texas Intermediate (WTI) crude futures fell $3.50, or 3.9%, to $85.61. Brent and WTI crude oil futures fluctuated between positive and negative territory for most of Friday, falling by 6.4% and 7.6% on a weekly basis, respectively. US core inflation recorded the biggest annual increase in 40 years, reinforcing the view that interest rates will remain high for a longer period of time amid the risk of global recession. The next US interest rate decision will be announced on November 1-2. Consumer sentiment in the US continued to improve steadily in October, but households' inflation expectations deteriorated slightly, a survey showed. "The improvement in consumer sentiment is seen as a negative because it means the Fed needs to discourage consumers and slow the economy further, which is causing a rise in the dollar and downward pressure on the oil market," said Phil Flynn, an analyst at Price Futures Group in Chicago. The US dollar index rose around 0.8%. A stronger dollar makes fuel more expensive for buyers using other currencies, reducing demand for oil. In US supply, energy firms added eight oil rigs this week, bringing the total to 610, the highest level since March 2020, energy services firm Baker Hughes Co said. China, the world's largest crude oil importer, is struggling with COVID-19 flare-ups after a week-long holiday. The country's infection tally is small by global standards, but it adheres to a zero COVID policy that places a heavy burden on economic activity and therefore oil demand. The International Energy Agency (IEA) on Thursday cut its oil demand forecast for this and next year, warning of a potential global recession. The market is still digesting last week's decision by the Organization of the Petroleum Exporting Countries and its allies known as OPEC+ to cut oil production targets by 2 million barrels per day (bpd). Underproduction within the group means there will likely be a cut of 1 million bpd, according to IEA estimates. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!