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Oil prices tumble on demand worries

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New York - Oil prices tumbled on demand worries Wednesday while global equities mostly rose as US-China tensions receded somewhat after House Speaker Nancy Pelosi's trip to Taiwan.

The drop in oil prices came despite a move by the OPEC+ oil cartel, led by Saudi Arabia and Russia, to undertake just a small increase in production.

The OPEC+ decision to raise production by 100,000 barrels per day for September is likely to disappoint US President Joe Biden, who traveled to Saudi Arabia last month to lobby for help to tame soaring energy prices.

The increase is much smaller than other recent boosts by the exporter group. But oil prices finished about four percent lower following US energy data that showed unexpectedly weak gasoline demand.

Gasoline demand last week was 8.5 million barrels per day, down almost 13 percent from the year-ago period, which is part of the peak summer driving season.

In equity markets, Wall Street stocks bounced after two down sessions following a report from the Institute for Supply Management that showed surprising strength in the massive US services sector, thanks to a jump in business activity and new orders even as some companies expressed recession fears.

A note from Oxford Economics described the ISM data as "encouraging," but pointed to lingering questions about the direction of the economy.

"The recovery's best days are clearly in the rearview mirror, but this doesn't mean a downturn has begun," Oxford said. "We think fundamentals are strong enough to prevent a recession this year, though the window to achieving a softish landing is narrowing." All three US indices won solid gains, with the S&P 500 finishing 1.6 percent higher.

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