LONDON: Oil slipped further below $60 a barrel on Thursday, extending the previous session’s 3 per cent drop, pressured by mounting recession concerns and a surprise boost in US crude inventories.
In a sign of investor concern that the world’s biggest economy could be heading for recession, weighing on oil demand, the US Treasury bond yield curve inverted on Wednesday for the first time since 2007.
Brent crude LCOc1 was down 20 cents at $59.28 a barrel by 0840 GMT, after a 3 per cent slide on Wednesday. US crude CLc1 was down 11 cents to $55.12 a barrel.
“The market is becoming very anxious about global growth,” said Tamas Varga of oil broker PVM.
The price of Brent is still up 10 per cent this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries and allies such as Russia. Traders say they expect top exporter Saudi Arabia to reduce output further.
But the efforts by the Opec+ producer group to boost the market have been countered by worries about the global economy amid the US-China trade dispute and uncertainty over Brexit, as well as rising US stockpiles of crude.
China reported disappointing data for July, including a surprise drop in industrial output growth to a more than 17-year low. A slump in exports sent Germany’s economy into reverse in the second quarter. “Recession risk remains the focus,” said analysts at JBC Energy in a report.
A second week of unexpected rises in US crude inventories is adding to the pressure. US crude stocks grew by 1.6 million barrels last week, compared with expectations for a drop of 2.8 million barrels, the Energy Information Administration (EIA) said. — Reuters
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