Oil Falls as Recession Fears Hit Energy Demand Expectations

Oil prices slipped on Tuesday as concerns that the global economy could be slowing outweighed an agreement by OPEC and allies, including Russia, to extend supply cuts until next March.


West Texas Intermediate graph

Brent crude futures LCOc1 were down 42 cents, or 0.65%, at $64.64 a barrel by 1220 GMT.

U.S. crude futures for August CLc1 were down 38 cents, or 0.64%, at $58.71 a barrel, after touching their highest in more than five weeks on Monday.

The Organization of the Petroleum Exporting Countries along with other top producers, including Russia, agreed on Tuesday to extend oil supply cuts until March 2020 as members overcame differences to try to prop up prices.

Meanwhile, U.S. crude oil stockpiles were seen falling for a third consecutive week, a preliminary Reuters poll showed on Monday, also supporting prices.

But signs of a global economic slowdown which may hit oil demand growth, means OPEC and its allies may face an uphill battle to shore up prices by reining in supply.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza