Oil prices fall on warnings of economic slowdown

LONDON, July 19 (Reuters) – Oil prices fell 2% on Tuesday after climbing more than $5 a barrel in the previous session, weighed on fears that an economic slowdown could affect demand for oil , but tight supply and dollar weakness limited some losses.

Brent futures for September settlement fell $1.62 or 1.5% to $104.65 a barrel at 11:53 GMT. The contract rose 5.1% on Monday, the biggest percentage gain since April 12.

WTI crude futures for August delivery fell $1.87, or 1.8%, to $100.73 a barrel. The contract climbed 5.1% on Monday and the biggest percentage gain since May 11.

The August WTI contract expires on Wednesday and the most actively traded September contract was at $97.66 a barrel, down $1.76, or 1.8%.

The International Monetary Fund warned on Tuesday that any Russian action to cut gas supplies to Europe would trigger economic contractions of more than 5% over the next year in the Czech Republic, Hungary, Slovakia and Italy. , reported the Financial Times.

Russia’s Gazprom told customers in Europe it could not guarantee gas supplies due to “extraordinary” circumstances, according to a letter seen by Reuters. Read more

Expectations of rising crude oil inventories in the United States also weighed on prices.

A preliminary Reuters poll showed U.S. crude and distillate supplies may have increased last week, while gasoline inventories likely fell. Read more

Oil prices have been on turmoil amid supply concerns as Western sanctions on Russian crude and fuel supplies during the Ukraine dispute disrupted trade flows to refiners and end users and rising concerns that the central bank’s efforts to rein in soaring inflation could trigger a recession that would reduce future demand for fuel.

“Prices climbed aggressively as the tight situation on the supply front returned to the spotlight,” said Stephen Brennock of brokerage PVM.

US President Joe Biden last week visited Saudi Arabia, the world’s largest oil exporter, hoping to strike a deal on increased oil production to rein in fuel prices.

However, officials from Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), have given no clear assurances that production will be increased.

The kingdom’s foreign minister said on Tuesday he saw no shortage of oil in the market, but a lack of oil refining capacity, making it necessary to invest more in the ability to process crude oil into various oil products. Read more

“As of today, we don’t see a shortage of oil in the market. There is a lack of refining capacity, which is also a problem, so we need to invest more in refining capacity,” the minister said. of Foreign Affairs, Prince Faisal bin Farhan Al. Saud told reporters in Tokyo.

Oil prices were supported by a weaker US dollar on Tuesday, which was around a one-week low, making greenback-dominated oil slightly cheaper for buyers holding other currencies.

Additional reporting by Muyu Xu in Singapore; edited by David Evans and Louise Heavens

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