Oil prices crashed further yesterday to extend sharp overnight losses as Unite States crude inventories unexpectedly rose, as fears of recession mounted and economic data out of China and Europe disappointed.
Brent crude was down 39 cents, or 0.7 per cent, at $59.09 a barrel after falling 3 per cent in the last session.
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Also, the U.S. crude was down 28 cents, or 0.5 per cent, at $54.95 a barrel, having dropped 3.3 per cent in the previous session.
The combination of a slew of data suggesting a slowdown in global growth amid the U.S.-China trade war and persistently high levels of oil in U.S. storage has punctured recent optimism in crude markets; stoking expectations leading oil producers may take further steps to support prices.
“This latest collapse in prices is likely to put further pressure on Saudi Arabia,” ANZ said in a note.
“It has already hinted at cutting production to arrest the falls.”
The Organisation of the Petroleum Exporting Countries (OPEC) has been mostly trimming production since the start of 2017 and traders say they expect Saudi Arabia to reduce output further amid slowing global oil demand.
The U.S. Treasury bond yield curve inverted for the first time since 2007, a sign of investor concern that the world’s biggest economy may fall into recession.
China reported disappointing data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the U.S. intensifies.
Global economic worries, amplified by tariff conflicts and uncertainty over Brexit, are also hitting European economies. A slump in exports sent Germany’s economy into reverse in the second quarter, data showed, while the euro zone’s GDP barely grew in the second quarter of 2019.