Oil Prices Hold Steady As Recession Worries Offset Lower U.S. Stocks

Oil Prices Hold Steady As Recession Worries Offset Lower U.S. Stocks

By Florence Tan

(Reuters) -Oil prices were little changed on Thursday as investors grappled with falling stockpiles in the United States, rising output from Russia and worries about a potential global recession.

Brent crude futures climbed 15 cents, or 0.2%, to $93.80 a barrel by 0347 GMT. U.S. crude futures gained 4 cents, or 0.1%, to $88.15 a barrel.

Prices rose more than 1% during the previous session, although Brent at one point fell to its lowest since February.

Futures have fallen over the past few months, as investors have pored over economic data that has spurred concerns about a potential recession that could hurt energy demand.

British consumer price inflation jumped to 10.1% in July, its highest since February 1982, intensifying a squeeze on households.

The oil market remains in a multi-year tightening cycle, RBC Capital’s Mike Tran said, adding that investors are in search of near-term upside catalysts.

“The recession fears are well acknowledged, but the bullish catalysts such as the return of China or supply degradation from Russia remain elusive,” he added.

China’s refining output remained lacklustre in July as strict COVID-19 lockdowns and fuel export controls curbed production.

In supply, Russia has started to gradually increase oil production after sanctions-related curbs and as Asian buyers have increased purchases, leading Moscow to raise its forecasts for output and exports until the end of 2025, an economy ministry document reviewed by Reuters showed.

Russia’s earnings from energy exports are expected to rise 38% this year partly due to higher oil export volumes, according to the document, in a sign that supply from the country has not been affected as much as markets originally had expected.

U.S. crude stocks fell by 7.1 million barrels in the week to Aug. 12, Energy Information Administration (EIA) data showed, against expectations for a 275,000-barrel drop, as exports hit 5 million barrels per day (bpd), the highest on record.

EIA’s data pointed to a rise in implied demand by 225,000 bpd over the week as recent weakness in pump prices appeared to have provided some support to demand, ING analysts said in a note.

Saudi Arabia’s crude oil exports rose in June, while output increased to a more than two-year high, data from the Joint Organizations Data Initiative (JODI) showed on Wednesday.

The market is also awaiting developments from talks to revive Iran’s 2015 nuclear deal with world powers, which could eventually lead to a boost in Iranian oil exports.

Iranian crude exports could climb for a third straight month in August, buoyed by Chinese demand as Russian oil becomes more expensive, data firms tracking the flows said.

(Reporting by Florence Tan in Singapore and Stephanie Kelly in New York; Editing by Richard Pullin and Christian Schmollinger)